Improvement In Revenue Has No Positive Effect On Bitcoin Mining Profitability

Bitcoin has had an interesting year.

Every company has been hit with the effects of the bear market, but Bitcoin has still managed to increase their revenue lately. Unfortunately, Bitcoin mining hasn’t had the same success, which could be due to a few different reasons. With the hashrate reaching new heights, the bigger electricity tariffs are pushing miners out that want to maintain the same profit as before.

In a report from Diar, the mining revenue for BTC miners during the first two quarters of 2018 was actually greater than everything that miners earned in 2017. When adding in the numbers logged in the third quarter, the mining revenue passes last year’s results by over $1.4 billion. However, even with these numbers, the profitability of mining is the part that is taking the brunt of the damage.

As the year has gone on, the miners doing the work have earned less and less, concluding with zero profit by September.

As part of this misfortune, there’s been a major downtrend of the BTC price as 2018 has gone on. Bitcoin has lost 60% of the value, which is linked with the volatility of the market and their low liquidity. Perhaps these events have made it less than surprising about the demise the mining profitability has seen.

One of the main forces that is contributing to the profitability seems to be the network hashrate, which has double since May 2018, bringing it from 28 quadrillion hashes per second to more than 57 quadrillion hashes per second. In May, Sam Doctor of Fundstrat Global Advisors said that $7,300 was the mining breakeven cost.

However, since then, the new figure is $1,300 higher. Even though September seems to have been tapering off with the prices, this could be due to the small miners deciding to pull out of the game.

One of those players that has announced their exit Is HashFlare, who ultimately ended their mining contract with Bitcoin. The declining mining profitability seemed to be the biggest cause for concern, which also seems to be the case with Genesis Mining. However, Genesis advised their customers to upgrade their package to continue participation, as the lower-tier membership was the only aspect impacted.

As the smaller companies are phased out, bigger names like Bitmain have remained focused, while still consolidating. Right now, with 54,000 BTC available to mine each month, miners are still earning fees, which are put on top of the base block reward.

There are still opportunities for expansion, but the dwindling amount of Bitcoin left to mine still puts a major restriction on smaller and larger miners.

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