Bitcoin Mining Profits Plunge Post-Halving, Miners Strategize to Stay Afloat
Summary:
Bitcoin mining profits took a hit in May due to the impact of the fourth Bitcoin halving, which reduced mining rewards from 6.25 BTC to 3.125 BTC. Although the miners managed to maintain earnings briefly due to initial excitement, the total revenue from block rewards and transaction fees hit a new low of $26.3 million on May 1. Consequently, miners worldwide are recalibrating their strategies to stay profitable by upgrading their mining equipment. The company Bitfarms, for instance, invested $240 million to triple its hash rate. However, despite proactive efforts, it reported its lowest monthly earnings of 269 Bitcoin in over two years in April.
In May, Bitcoin (BTC) mining profits faced a substantial tumble as the repercussions of the fourth Bitcoin halving incident took effect. The halving function of Bitcoin was crafted to progressively limit the 21 million BTC release over a lengthy period. The April 20 halving event sliced the mining rewards to 3.125 BTC from an earlier 6.25 BTC. The early excitement surrounding the halving and the debut of Bitcoin Runes provided a brief bolster to the daily earnings of the miners, however, a significant dip in earnings was witnessed in May. The total earnings from block rewards and transaction charges hit a new low of $26.3 million on May 1. In comparison, Bitcoin miners typically bagged around $6 million daily, as per data from Blockchain.com.
The number of Coinbase block rewards and transaction charges in U.S. dollars given to miners are calculated by blockchain.com. The remainder of May demonstrated similar revenue trends, signifying a new standard in Bitcoin mining earnings. Interestingly, mining profits hit its peak on April 20 to create a record high of more than $107 million daily earnings in Bitcoin's history. In anticipation of this sharp drop, worldwide miners have realigned their operations to stay profitable in the forthcoming Bitcoin economic phase. Otherwise, they have to bank on Bitcoin's high market worth for operational support.
CryptoQuant CEO, Ki Young Ju, estimated that Bitcoin needs to maintain its price above $80,000 to ensure profitable mining post-halving under existing conditions. Nevertheless, the majority of the miners have taken initiative to upgrade their mining apparatus to decrease operational costs in the long run and be more competitive. For instance, Bitcoin mining company Bitfarms has allocated $240 million to triple its hash rate. Jeffrey Lucas, Bitfarms CFO, explained the company's enthusiasm to get 88,000 highly efficient Bitcoin miners.
Lucas said that the transformational fleet update catapults Bitfarms in terms of scale and profitability amid the Bitcoin halving. This shift technicians Bitfarms' hash rate to 21 EH/s, boosts their planned operational capacity by 83% to 440 megawatts (MW), and enhances fleet efficiency by 40% to 21 w/TH. Despite this effort, Bitfarms noted its minimal monthly earnings of 269 Bitcoin in over two years in April.
Published At
5/6/2024 11:16:19 AM
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