According to a report by Jefferies, Bitcoin mining profitability declined 5% in August compared to July. A miner operating a fleet with 1 exahash per second (EH/s) would have earned approximately US$55,000/day in August, down from around US$58,000/day in July. A year ago, the same fleet would have made about US$44,000/day, so while there’s still growth year-over-year, the short-term trend is negative.
Reasons for the Drop
Several factors are contributing to this reduction in profitability:
- Increase in Network Hashrate
The difficulty for mining Bitcoin rose as more computational power (hashrate) joined the network, increasing competition and reducing the share of revenue for each miner. - Slight Drop in Output Among Public U.S. Miners
U.S.-listed miners produced 3,573 BTC in August, down from 3,598 BTC in July, but their portion of the network hashrate stayed steady at about 26% - Flat or Slightly Weaker BTC Price / Revenue Pressures
Although Jefferies’ report focuses mostly on hashrate, miners are also dealing with costs (electricity, hardware, maintenance). When revenue growth doesn’t match the increase in difficulty and operating costs, profitability drops. (Implied in the report’s analysis) CoinDesk
What It Means for Miners & Investors
- Margins Could Tighten Further: Miners with less efficient operations or higher energy costs will feel pressure first. Those in lower electricity cost zones or with better hardware will fare better.
- Need for Efficiency: Upgrades in mining hardware, improvements in energy sourcing, and optimizing operational costs will become more critical.
- Potential Focus on Diversification: Some mining companies might explore alternative revenue streams (leasing out excess compute, engaging in AI/HPC workloads, etc.) to supplement mining income.
- Short-Term Investor Sentiment May Waver: Investors may become cautious or pull back slightly from miners, especially those with weak balance sheets or high costs, because declining profitability affects expected returns.
Broader Context
- The Bitcoin network’s difficulty tends to increase with hashrate, so such dips in profitability are not unusual, especially during periods when many machines are being added.
- Longer-term, miners anticipate cyclical behavior: profitability may recover if BTC price rises, or if some miners drop out or refresh hardware.
