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 Bitcoin.com CEO Roger Ver says is “incredibly bullish.”

Hash Wars: Mining Operation OrcaPool Launches to Defend Altcoins and Forks From ‘Attackers’

A new mining operation dubbed “OrcaPool” has recently been launched, with the goal of defending altcoins and forked coins from attackers who may attempt to pull 51% attacks on them. Specifically, the pool appears to be a response to SharkPool.

At the time of Bitcoin Cash’s hard fork last year, a new cryptocurrency mining pool, SharkPool, was launched. The pool, founded by Bitcoin Satoshi’s Vision (BSV) supporter Ari Kuqi, threatened to annihilate “alts who dare bearing the Bitcoin name,” and specifically named Bitcoin Gold, Bitcoin Diamond, and Bitcoin Private.

SharkPool’s plan to annihilate cryptocurrencies is to dominate their hashrate to then start mining empty blocks on their chains. This stops transactions from going through, which over a long period of time creates a significant transaction backlog, making their network useless. The second part sees it sell the rewards it gets from those blocks for BSV, pushing its price up and putting selling pressure on the attacked crypto.

So far, SharkPool has seemingly attacked BCH’s testnet forcing it to add additional security resources, and Bitcoin Private’s (BTCP) mainnet, forcing cryptocurrency exchanges to require 1,500 network confirmations on transactions.

Speaking to CryptoGlobe, Kuqi revealed that behind SharkPool’s ideology is Nakamoto Consensus. Per his words, nothing the pool does is “illegal,” as it “obeys all laws and regulations.” He added “miners execute their executive power by voting with their hash, building on a block or orphaning it.”

At the time Kuqi, the founder of Cashpay Solutions, also noted it doesn’t matter whether Craig Wright is indeed Satoshi Nakamoto, as SharkPool “fights for sound and stable money.” The pool has over the past few months been recruiting miners.

Now OrcaPool, on Twitter, has revealed its goal is to counter SharkPool’s activities, and that it’s also recruiting miners to join its resources. Its website explains the Orca was chosen as it’s a natural predator of the shark.

The new pool is reportedly going to sell the rewards of blocks it mines for bitcoin. So far, the war between the two pools has seemingly only been occurring on social media. SharkPool, reacting to the competitor, stated:

As onlookers piled on, OrcaPool pushed back: