Bitcoin Miners Race for Profitability Ahead of Halving: CryptoQuant

With the fourth Bitcoin halving just 15 days away, miners are focused on increasing profitability before block rewards are significantly reduced.

Some Bitcoin mining companies have increased their sales activity, but still face challenges including low transaction fees, increasing mining competition, and the need for higher computing power to produce the same amount of BTC.

Miners struggling to remain profitable

The Bitcoin block reward reduction from 6.25 BTC to 3.125 BTC will have a significant impact on miners. Their profits will be cut by 50% and they will need higher BTC prices to remain profitable.

According to CryptoQuant’s latest weekly cryptocurrency report, the daily revenue of the mining industry has reached record levels in 2024 due to the rise in BTC price. Revenues currently stand at around $67 million, but in early March they hit $79 million, a 3.5x increase from the figure recorded in May 2020, just before the previous halving.

Unfortunately, hash prices are missing due to the surge in daily profits for miners. Hash prices were 30% lower than before the last halving. The hash price, which is the average profit miners earn each time they try to find a valid block, is currently $0.11 and will fall to $0.055 after the halving. In May 2020, this indicator hovered around $0.16TH/s.

In addition to the lower hash price, the Bitcoin hash rate has increased more than fivefold since the previous halving, increasing from 116 EH/s to 600 EH/s at the time of this writing. This means that miners need more computing power to produce the same amount of BTC per day.

Reduced transaction fees

Additionally, Bitcoin transaction fees have plummeted 90% from a daily total of 412 BTC in mid-December 2023 to just 29 BTC at press time.

“In fact, the transaction fee is low compared to the total block reward (Bitcoin new issuance + transaction fee). Transaction fees account for approximately 3% of total block rewards, down from 37% in mid-December 2023. The fee was around 3% even before the May 2020 halving. Higher fees or Bitcoin prices are required to compensate for the losses. Block rewards,” CryptoQuant analysts explained.

These challenges have already impacted the daily BTC production of the largest Bitcoin mining companies such as Riot Platforms, Core Scientific, Bitfarms, and Marathon Digital. We’ll have to wait and see what happens to them in the coming months.