Bitcoin Miners Report Declines in Production as Profitability Slumps
One of America’s largest crypto mining companies, Hut 8, has reported a sharp drop in proprietary production for April, according to a company announcement on May 6.
The firm reported a 36% drop in BTC mined in April compared to March. However, this was primarily due to the relocation of over 25,000 mining machines from sites in Nebraska and Texas, which were acquired by Marathon Digital Holdings.
Hut 8 produced 148 BTC in April compared to 231 BTC in March, as its deployed hash rate fell from 5.4 EH/s (exahashes per second) to 4.5 EH/s.
“Amidst the backdrop of the halving, the operational capabilities of our team enabled us to maximize deployed hash rate as we completed the relocation of our fleet from hosted to owned facilities and brought new capacity online,” said Asher Genoot, CEO of Hut 8.
Mining Output Declines
Hut 8 was not the only major Bitcoin mining firm to report a reduction in production. Other public mining companies such as Bitfarms, Cipher, CleanSpark, Core Scientific, Riot, and Terawulf also reported production declines of between 6% and 12% in April, according to industry outlet The Miner Mag.
The halving event on April 20 reduced the block reward by half to 3.125 BTC, which also halved the mining output to around 450 BTC per day from 900.
However, the BTC fee market briefly negated the impact of the halving when Bitcoin Runes were launched, pushing up demand for block space. Nevertheless, as the latest meme asset craze loses popularity, it is expected that BTC production rates may continue to decline and miner selling may increase.
Building apps on #Bitcoin has significantly changed miners’ income streams.
Transaction fees now account for over 7% of their total revenue, up from 1% two years ago.
This trend has persisted for the last four weeks and could potentially strengthen the network’s fundamentals. pic.twitter.com/YVbdmLXB5c
— Ki Young Ju (@ki_young_ju) May 7, 2024
On May 6, Riot Blockchain reported its April production updates. The firm had a 12% decline in BTC production in April, with 375 BTC produced compared to 425 in March.
However, Riot expects its total self-mining hash rate capacity to reach 31 EH/s by the end of 2024, more than doubling its current capacity.
Profitability Slump
The output reductions have coincided with a fall in profitability or ‘hash price.’ The current hash price is just $0.05 per terahash per second per day, according to Hash Rate Index.
It has slumped 72% from a spike around the time of the halving to $0.182/TH/s/day and is down a whopping 87.5% from its 2021 highs of around $0.400/TH/s/day.
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