Bitcoin Mining Revenue Plummets as Hashrate Soars

Bitcoin network hash rate reaches new heights

The Bitcoin network hash rate has surged to record levels, reaching a peak of 414 exahashes per second (EH/s) on August 18. This marks a 54% increase since the beginning of 2023 and an 80% increase over the past 12 months. The high hash rate indicates the network's strong security and stability.

Revenue per terahash drops to historic lows

While the Bitcoin network appears robust, miners are facing a sharp decline in revenue. The current Bitcoin mining revenue, also known as "hash price," has slumped to levels not seen since the collapse of FTX in November 2022. According to HashPriceIndex, miners are earning just $0.060 per terahash per second per day, which is around half of what it was in early May. This drop in revenue is similar to the market cycle low of around $16,500 in November 2022.

Mining profitability threatened by high hash rate

Market analysts are warning that the profitability of Bitcoin mining is at risk due to the high hash rate. Dylan LeClair, a market analyst, suggests that while more efficient mining rigs are continuously being produced, the prices of Bitcoin need to increase to keep mining profitable. This is because the costs of running high hash rates are not matching the current revenue. Miners have been relying on funds from stock sales to stay operational during the bear market.

Miners resorting to debt and diluting shareholders

In the second quarter, major publicly traded miners reportedly raised about $440 million through stock sales. However, with these lifelines drying up, miners may have to resort to selling off the Bitcoin they have been accumulating instead. Mark Jeftovic, who runs the Bitcoin Capitalist newsletter, warns that some mining companies are diluting their shareholders at an excessive rate. If this continues, miners will find themselves in a precarious situation where they are diluting their shareholders faster than the value of Bitcoin is rising.