Bitcoin Mining Profitability Climbs for Second Consecutive Month

QuickTake

• Mining Profitability Rises: December marked the second straight month of improved profitability for Bitcoin miners, with daily revenue hitting its highest level since April 2024.
• Revenue Still Below Pre-Halving Levels: Despite gains, daily revenue and gross profit per exahash (EH/s) remain 43% and 52% below pre-halving levels, respectively.
• Hashrate Growth Moderates: The network hashrate rose by 6% in December, reflecting slower growth compared to previous years.
• Market Cap Decline: The total market capitalization of 14 publicly listed Bitcoin mining companies tracked by JPMorgan dropped 23% to $28 billion last month.

  Bitcoin mining profitability continued its upward trajectory for the second consecutive month in December, reaching the highest levels since April 2024, according to a report by JPMorgan. The increase comes as Bitcoin’s price rally outpaced the growth in network hashrate, offering miners some relief after a challenging year.

  Improved Daily Revenue

  JPMorgan analysts Reginald Smith and Charles Pearce noted that Bitcoin miners earned an average of $57,100 in daily block reward revenue per exahash per second (EH/s) in December—an improvement of 10% from November. Despite this increase, profitability metrics remain significantly below pre-halving levels, with daily revenue and gross profit per EH/s down 43% and 52%, respectively.

  The recovery in profitability is being closely watched by miners who have struggled with rising operational costs, increasing mining difficulty, and a competitive market.

  Network Hashrate and Difficulty

  Bitcoin’s network hashrate, which measures the total computational power dedicated to mining and processing transactions on the blockchain, grew by 6% in December to an average of 779 EH/s. This reflects a moderation in growth compared to the previous year, where the hashrate surged by 103%. In 2024, the hashrate increased by 54%, indicating a slower expansion pace.

  Mining difficulty, which adjusts approximately every two weeks to ensure consistent block times, rose by 7% in December. The difficulty level is now 27% higher than it was before the April 2024 halving event, further straining miner profitability.

  Mining Stocks See Mixed Results

  The broader market for Bitcoin mining stocks faced headwinds in December, with the total market capitalization of 14 publicly listed miners tracked by JPMorgan falling by 23% to $28 billion. This decline follows a 52% increase in November, underscoring the volatile nature of the sector.

  TeraWulf (WULF) stood out as the top performer among mining stocks, achieving a remarkable 136% gain in 2024. This outpaced Bitcoin itself, which climbed approximately 120% during the same period.

  Impact of the 2024 Halving

  The April 2024 Bitcoin halving event significantly impacted miner revenues, as the block reward was reduced from 6.25 BTC to 3.125 BTC per block. This halving intensified competition among miners, leading to a drop in profitability despite Bitcoin’s price recovery in subsequent months.

  While December’s profitability uptick offers a glimmer of hope, analysts caution that the industry still faces substantial challenges, particularly with the next halving event scheduled for 2028.

  Future Outlook for Bitcoin Miners

  Looking ahead, the mining industry’s profitability will depend on several factors, including Bitcoin’s price trajectory, technological advancements in mining hardware, and the adoption of renewable energy solutions to offset rising electricity costs.

  JPMorgan’s report highlights the importance of efficiency in mining operations as the network continues to grow. Miners that can effectively balance operational costs with rising difficulty levels and hashrate competition are likely to thrive in the evolving landscape.

  Conclusion

  Bitcoin mining remains a complex and competitive endeavor, but December’s profitability gains signal a potential turning point for the sector. With market dynamics constantly shifting, miners must adapt to new challenges while capitalizing on opportunities created by Bitcoin’s ongoing adoption and price movements.

  The performance of key players like TeraWulf demonstrates the potential for success in this volatile market, offering a roadmap for others aiming to navigate the ever-changing terrain of cryptocurrency mining.