Bitcoin Mining Faces Challenges Amidst Changing Economics
Bitcoin Mining Economics Under Pressure
Bitcoin's network hashrate experienced a sequential decline in May, marking the first drop since December 2022. This change reflects challenges in mining economics, particularly for outdated ASICs post-halving. The daily mining revenue has plummeted to over 50% below pre-halving levels, indicating potential stagnation in hashrate growth in the near future.
Positive Trends for U.S.-Listed Mining Stocks
Despite these hurdles, May proved favorable for U.S.-listed mining stocks. Companies reported record revenues for the first quarter of 2024, even without mark-to-market gains on HODL balances. The market cap of 14 U.S.-listed miners observed a 19% increase, reaching $18.4 billion. Notably, Iris Energy saw a remarkable 80% rise in its share value.
Bitcoin Price and Volatility Insights
The average Bitcoin price in May was approximately $65,200, showing a slight decrease from April. However, by month's end, the price rose to about $68,400, marking an 8% increase from April's end. Bitcoin's annualized volatility remained steady at 51%, close to the previous month’s 54%.
Hashrate and Difficulty Adjustments
The network hashrate, a measure of competition within the industry, decreased as inefficient operators left the network. The average hashrate in May was 599 EH/s, a 4% decrease from April and a 50 EH/s drop from pre-halving levels. Mining difficulty also saw a 4% reduction from April.
Decline in Mining Profitability
Bitcoin mining profitability hit record lows in May, with miners earning an average of $49,000 per EH/s in daily block reward revenue. This is a significant drop from November 2021's peak of $342,000 when Bitcoin's price was $60,000. Transaction fees varied, reaching over 100% of block rewards at certain points in May.
Market Cap and Revenue Opportunities
As of May 31, the proved block reward stood at $87.9 billion, with a four-year revenue opportunity of $43.8 billion, both up 9% from April. The aggregate market cap of the 14 U.S.-listed miners was 21% and 42% of the proved and four-year block reward opportunities, respectively, surpassing historical averages.
Performance of U.S.-Listed Miners
The group of 14 U.S.-listed Bitcoin miners accumulated a market cap of $18.4 billion by the end of May. Iris Energy Ltd emerged as the best performer with a 79% increase, while Stronghold Digital Mining Inc saw an 11% decline.
What is Coinefficiency?
Coinefficiency is your go-to platform for optimizing cryptocurrency trading, investments and strategies. We provide a comprehensive suite of tools to analyze market trends, monitor price movements, and execute effective trading strategies. Whether you're a seasoned trader or new to crypto, Coinefficiency helps you maximize your profits with data-driven insights.
Why Use Coinefficiency?
- Advanced market analytics to identify trading opportunities.
- Compare markets relative performance.
- Understand market cycles over time. See market levels.
- Compare buy-and-hold, portfolio rebalancing, Dollar-Cost-Averaging trading strategies.
With Coinefficiency, you can stay ahead of the market and execute efficient trading strategies effortlessly.
Get Started with Coinefficiency
Ready to optimize your crypto investments? Take control of your portfolio with cutting-edge tools designed for both beginners and experts.