The profitability of the Bitcoin mining industry is facing new strains amid growing competition on networks and falling revenues.
Bitcoin miners are facing new pressure as the network hashrate – a measure of the total computing power competing to secure the Bitcoin network – soared to a record 1.16 ZH/s in October while that of Bitcoin (BTC) the price fell to $81,000 in November, according to a report by Le Mineur Mag.
Hashprice, which tracks miners’ revenue per unit of computing power, fell below $35 per hash, falling below the median total hash price of $45/PH/s reported by state-owned mining companies. This decline leaves several operators close to the break-even point.
The report notes that payback times for mining rigs are stretching over 1,200 days, while financing costs continue to rise in the sector, adding even more strain.
The slowdown follows a relatively stable third quarter, during which the hash price averaged around $55/PH/s, driven by BTC trading near $110,000. Growing competition on the network and the decline in the price of Bitcoin starting in November pushed mining profitability to its lowest levels on record.
Financial stress has also coincided with an increase in borrowing by miners, driven primarily by a wave of near-zero coupon convertible bonds over the past quarter.
As miners accelerate their transition to AI and high-power computing (HPC), revenue from these services remains too low to significantly offset the sharp decline in Bitcoin mining revenue, according to the report.
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Stocks jump after JPMorgan price targets
Despite the sector’s economic tightening, the top ten publicly traded mining companies were all up over the past 24 hours, with CleanSpark, Cipher Mining and IREN posting double-digit gains on Monday.
This increase follows a study by JPMorgan note raising price targets for all three miners, pointing to an increase in long-term HPC and cloud deals in the sector.
JPMorgan said Cipher’s stock price had fallen about 45% from its peak, creating a more attractive entry point, and noted the company was “well positioned” to sign additional deals with HPC tenants.
In November, IREN signs five-year, $9.7 billion GPU cloud services deal with Microsoft, giving the tech giant access to Nvidia GB300 GPUs hosted in IREN’s data centers
The bank cut its estimates for Marathon Digital and Riot, arguing that falling Bitcoin prices and rising shares are weighing on the two miners’ large coin holdings.
The rise in mining stocks also coincided with a slight rebound in the price of Bitcoin, which rose about 2% in the past 24 hours and was trading at around $89,000, according to CoinGecko. data at the time of writing.
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