Bitcoin Mining Profitability Hits Record Low Amid Rising Network Hashrate and Declining Stock Values

Mining profitability has hit an all-time low as the network hashrate climbed in the first two weeks of August. According to a recent report, the share of U.S. miners in the Bitcoin network hashrate reached a record high of 26%. This month, the hashrate has increased by about 1% so far.

JPMorgan noted that Bitcoin mining stocks gave back gains tied to artificial intelligence (AI) during this period. The rising hashrate pushed mining profitability down to record lows. To clarify, hashrate refers to the total computational power used for mining and processing transactions on a proof-of-work blockchain.

The total market cap of the fourteen U.S.-listed miners tracked by the bank dropped by 18% since the end of July. Currently, these stocks trade at twice their proportional share of the four-year block reward, as analysts Reginald Smith and Charles Pearce pointed out.

But it’s not all bad news. U.S.-listed miners have seen their share of the Bitcoin network hashrate grow for the fourth month in a row, hitting a new record of 26%. The network hashrate increased by about five exahashes per second (EH/s), which is a 1% gain, bringing the average to 621 EH/s in the first two weeks of the month. However, this figure is still 30 EH/s below the levels seen before the halving.

The hashprice, a key measure of mining profitability, remains around 30% lower than what we saw in December 2022. It’s also about 40% below pre-halving levels. This could slow down hashrate growth in the near future.

Lastly, the report mentioned that Bitcoin's price has dropped roughly 5% since the halving. Nonetheless, it’s still up 35% year-to-date and an impressive 104% year-on-year.