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Bitcoin Mining Profitability Rose in June as Market Adjusted for the Halving: Jefferies

Jul 7, 2024
  • Bitcoin mining was more profitable in June than May, the report said.
  • Jefferies cut its Marathon Digital price target to $22 from $24.
  • The bank also reduced its price target for Argo Blockchain ADRs to $1.20 from $1.50 and for the U.K.-traded stock to 9.5p from 11.9p.
As an analyst with a background in cryptocurrencies and experience in following the mining industry, I find the recent report from Jefferies on the profitability of Bitcoin mining in June compared to May intriguing. The data suggests that despite the price increase and hashrate decrease, mining became less profitable for some companies, leading Jefferies to reduce their price targets for Marathon Digital, Argo Blockchain, and the U.K.-traded stock.As an analyst, I have observed that Bitcoin (BTC) mining became more lucrative for miners in June compared to May. The price of Bitcoin increased by approximately 2%, while the network hashrate decreased by around 5%. These changes occurred as the market began to adapt to the effects of the halving event. According to a research report published by Jefferies, an investment bank, on Monday.

“According to analyst Jonathan Petersen, June represented a more subdued bounce back from the significant effects of the halving, which had the most noticeable impact in May.”

Hashrate represents the total computational power employed across a proof-of-work blockchain network for mining transactions and validating new blocks. It serves as an indicator of industry competition and mining complexity. In April, there was a quadrennial event called reward halving, which resulted in a 50% reduction in miner rewards and consequently slowed down the growth rate of new bitcoin being added to circulation.

Marathon Digital’s price target at Jefferies was lowered from $24 to $22, keeping their “hold” recommendation. Similarly, the bank adjusted the price targets for Argo Blockchain’s ADRs and U.K. traded shares downwards to $1.50 from $1.20 and 9.5p (12 cents) from 11.90p respectively. Despite these adjustments, Jefferies continues to recommend holding the stock. One Argo Blockchain ADR represents ten ordinary shares.

A notable shift among Bitcoin miners has emerged, as they transition towards providing high-performance computing (HPC) and artificial intelligence (AI) services. This move aims to broaden their income sources and seize the growing market opportunity presented by the escalating demand for advanced AI technologies and cloud infrastructure.

As a researcher studying the trends in the cryptocurrency market, I’ve observed a notable change in mining strategies due to decreased profits from Bitcoin mining, most notably following recent halving events.

Mining companies based in the United States accounted for a higher proportion of newly mined bitcoins in June compared to May, according to the bank’s analysis. Specifically, these companies produced approximately 20.8% of the total new bitcoin supply, up from 19.1% in May. This increase occurred due to new mining capacity coming online and a decrease in the overall network hashrate.

In June, Marathon was the leading Bitcoin miner with a production of 590 tokens, which represented a 4% decrease compared to May’s output. CleanSpark (CLSK), on the other hand, saw an uptick of 7% and mined 445 tokens. Among U.S.-listed miners, Marathon held the largest installed hashrate at 31.5 exahashes per second (EH/s), while Riot Platforms (RIOT) followed closely with a capacity of 22 EH/s according to the report.

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2024-07-08 12:18