The largest Bitcoin mining companies are gaining more control over Bitcoin's network security. This is happening even though their stock performance this year hasn’t been great. Analysts at JP Morgan shared their insights in the “September ’24 Bitcoin Mining Halftime Report.” They noted that publicly listed U.S. mining firms have increased their share of the network hash rate for the fifth month in a row, reaching a record 26.7%.
Now, what is hash rate? It measures how quickly miners are working to mine the next Bitcoin block and earn rewards. When the hash rate goes up, it usually means miners are using more electricity and better equipment. This makes mining more competitive and enhances the security of the entire Bitcoin network.
In August, the 14 publicly listed miners tracked by JP Morgan added 12 exahashes per second (EH/s) to their operations. Canadian miner IREN led the way with an addition of 5.5 EH/s, while Marathon Digital, the largest corporate miner globally, added 3.7 EH/s.
Overall, these miners have boosted their hash rate by over 50% since the start of the year. Now, their total combined hash rate stands at 175 EH/s, which accounts for 26.7% of the entire Bitcoin network.
However, just because the hash rate is up doesn’t mean revenue is following suit. In fact, IREN was the only public miner in August to increase its Bitcoin production compared to the previous month.
JP Morgan pointed out that the amount of Bitcoin mined per exahash of operating capacity has dropped significantly this year. This decline is largely due to the Bitcoin halving event that took place in April, which cut the block reward from 6.25 BTC to 3.125 BTC.
As the analysts explained, “This metric has declined over time as the network hash rate and mining difficulty have increased, and it tends to drop during the summer months when miners scale back operations.”
Since September began, Bitcoin's hash rate has reached new all-time highs, while Bitcoin's price has trended downward. This combination is tough for miner profitability. Many public miners have seen their stock values fall, with CleanSpark (CLSK) experiencing a 12% drop.
The Valkyrie Bitcoin Miners ETF (WGMI), which reflects the mining industry as a whole, is down 2% year to date, even though Bitcoin’s price itself has risen by 30%.
JP Morgan also mentioned, “The aggregate market cap of the 14 U.S.-listed bitcoin miners we track declined 3% since the end of August and currently trades just shy of 2x their proportional share of the four-year block reward, the lowest level since May ‘24.”
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