Bitcoin Mining Profitability Remains at All-Time Lows as Prices Fall, Hashrate Rises, JPMorgan Says

As a seasoned crypto investor with over a decade of experience under my belt, I can’t help but feel a mix of excitement and caution upon reading this latest report from JPMorgan. The Bitcoin network hashrate returning to pre-halving levels is a clear sign that the mining industry is heating up again, which could potentially mean increased competition and potential price volatility.

The stocks of companies involved in Bitcoin mining saw a decrease during the first half of September because the price of Bitcoin was still under $60,000, and the strength of the network increased according to JPMorgan’s recent report.

Over the past month, the hashrate has increased by 4% and returned to its previous level following the halving event. This figure represents the collective computing power employed in both mining and processing transactions across a proof-of-work blockchain network, serving as an indicator of competition within the mining industry.

The daily miner’s profit indicator, known as hashprice, has dropped by 2% this month and is currently over 50% lower than its pre-halving values, according to the bank’s observation. This decrease, combined with seasonal reductions, may potentially slow down the short-term increase in the hashrate.

Analysts Reginald Smith and Charles Pearce noted that the portion of the total network hashrate held by U.S.-listed miners has risen for five consecutive months, reaching a record high of 26.7%.

The combined market value of the fourteen U.S.-based bitcoin mining companies monitored by the bank dropped approximately 3%, reaching nearly $20 billion, from the end of August. Among these, Hut 8 stood out with a 11% increase in value, while CleanSpark experienced a 12% decrease.

According to the report, the American mining companies that are publicly traded are currently trading at approximately twice their relative potential from the past four years’ block rewards, whereas they have typically traded at 1.6 times this value since January 2022.

Rival Wall Street Bank Jefferies cautioned that the bitcoin miners could be faced with another difficult month in September, in a research report published last week.