Factors like Bitcoin halving, market conditions, and network difficulty contribute to a significant decline in miners' earnings.
Bitcoin miners have recently faced significant challenges, recording their lowest daily revenue of the year on August 11, 2024. This article breaks down the factors contributing to this decline and how major mining companies are adapting to stay profitable.
The Bitcoin halving event on April 20, 2024, played a crucial role in the revenue drop. During this event, the reward for mining a Bitcoin block was halved from 6.25 BTC to 3.125 BTC. This reduction in rewards directly impacted miners' earnings, making it more difficult for them to generate the same level of income as before.
Several other factors have also contributed to the decline in miners' revenue. The bear market has led to a decrease in Bitcoin prices, further reducing the value of the rewards miners receive. Additionally, the increased network difficulty means that more computational power is required to mine Bitcoin, increasing operational costs for miners.
Despite a brief spike in revenue following the halving event, the overall trend has been downward. On August 11, 2024, miners recorded a daily revenue of just $2.54 million, a figure last seen in October 2023. This two-week downturn has been attributed to the combined effects of the bear market, decreased Bitcoin prices, increased network difficulty, and liquidations.
In response to these challenges, major mining companies like Bitfarms have taken steps to adapt and remain profitable. Bitfarms, for example, reported better-than-expected Q2 results and saw a nearly 22% rise in shares. The company plans to stay profitable by upgrading its fleet and expanding its operations.
