Bitcoin Mining Starts Becoming Unprofitable, Despite $4.7 Billion in Revenue This Year

  • A new research report claims bitcoin mining is becoming unprofitable.
  • This as the cryptocurrency's hashrate keeps rising, while its price has been ranging.

Bitcoin mining is seemingly starting to become unprofitable because of the network’s rising hashrate, even for large-scale operations. This, despite bitcoin miners raising a total of $4.7 billion in the first three quarters of this year.

According to a report published by blockchain research firm Diar, revenue in the first half of this year exceeded last year’s total by $1.4 billion. BTC’s rising hashrate, however, has seen miners paying retail electricity prices become unprofitable last month.

The firm notes miners currently earn 54,000 BTC ($350 million) a month and although the industry has been enduring a months-long bear market, the flagship cryptocurrency is still up 40% in the last 12 months. Despite these figures, bitcoin’s growing hashrate has seen China, where energy costs an average of $0.08 kW/h, become one of the “handful” of countries where it makes sense to mine.

Bitcoin's hashrate rises as miners' profitability dwindles

Diar adds that even at these prices logistics can take down inexperienced mining operations, as they may fail to properly manage salaries, rents, equipment, and more. Nevertheless, the report notes the market has “a lot of room left to grow and profits to squeeze.” It adds:

But Bitcoin mining has, at least for now, and most likely in the future, moved into the court of bigger players with deep pockets.

Bitmain, which filed for an initial public offering with the Stock Exchange of Hong Kong (SEHK), could be moving to act as a “swing producer in an effort to keep the network profitable for all miners.”

Per Diar, the cryptocurrency mining hardware manufacturer - who runs two of BTC’s largest mining pools and is a key investor in ViaBTC – gets most of its revenue (95%) from selling miners, and estimates it has cornered 75% of the global market for these.

Given miners’ falling profitability, Bitmain may be forced to “swing” its hashrate between countries to average out energy costs. It currently runs 11 mining farms in China, with 200,000 mining units in them. Diar claims that if these are fully deployed S9 miners working on bitcoin’s blockchain, then they could represent about 6% of the network’s hashpower.

Bitmain is reportedly also planning to launch three more mining farms in the United States in the first quarter of next year. The mining giant is likely also focusing on the bitcoin cash network, as it holds 1 million BCH – something CEO Roger Ver says is “incredibly bullish.”

Winklevoss Twins: Wall Street Has Been “Asleep at the Wheel” Regarding Bitcoin

Michael LaVere
  • Winklevoss Twins say Wall Street has been "asleep at the wheel" in acting on bitcoin.
  • Retail investors hold an advantage over institutions in the crypto marketplace. 

Cameron and Tyler Winklevoss, who founded the cryptocurrency exchange Gemini, said that Wall Street has been “asleep at the wheel,” in regards to bitcoin in their most recent interview. 

Sleeping on Bitcoin

Speaking with CNN Business on Aug. 22, the Winklevoss Twins explained the value of bitcoin as an investment, while giving their opinion on the risks of the cryptocurrency industry in comparison to the traditional financial sector. 

They were also critical of the established market’s slow acceptance of bitcoin and cryptoassets, claiming that Wall Street has fallen behind in that regard. Tyler Winklevoss argued that retail investors have had the edge of institutions in the market of crypto through their willingness to explore the new asset class. 

He continued, 

“Unlike the internet, which you couldn’t buy a piece of, you can actually buy a piece of this new internet of money. It’s still a retail-driven market, from day one [...] and a lot of people have done really well. Wall Street has been asleep at the wheel.”

In addition, the twins claimed not to be deterred by the high price volatility of bitcoin, and said the risk of missing out was much more compelling, 

“We had to invest because we were afraid of missing out, we couldn't miss out on this future.”

The twins also compared bitcoin to gold, which is becoming a more common financial analogy as investors and analysts view BTC as a digital store of value.