- Bitcoin miner revenue has fallen to around US$30 million (AU$42.6 million) per day, while transaction fees now contribute only a small share of earnings.
- Bitcoin has traded below JPMorgan’s estimated US$78,000 (AU$110,760) production cost for five consecutive months, leaving roughly 20% of miners unprofitable.
- Mining difficulty has declined twice this year and public mining companies sold more than 32,000 BTC in the first quarter to fund operations.
Bitcoin miners are contending with shrinking revenues and rising operational pressure as the market price of Bitcoin remains below estimated production costs. Daily mining income has fallen to approximately US$30 million (AU$42.6 million) on a seven-day average basis, a substantial decline from the more than US$50 million (AU$71 million) recorded last summer.
Revenue generated from transaction fees has also diminished. Fees currently contribute less than US$250,000 (AU$355,000) each day, making them a minor component of overall mining earnings relative to block rewards.
Bitcoin has been trading around US$62,500 (AU$88,750), compared with JPMorgan’s estimated production cost of roughly US$78,000 (AU$110,760). The cryptocurrency has remained below that level for five consecutive months, the longest period of its kind during the current cycle. Previous market cycles have seen production costs act as a soft floor for prices.
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Below-Cost Mining Takes Its Toll
Current market conditions have left about 20% of miners operating at a loss. Higher-cost participants have increasingly adjusted operations according to price movements, contributing to a stronger relationship between mining difficulty and Bitcoin’s price over the past six months. The beta between the two measures has climbed to 0.62.
The impact has extended to the broader network, with mining difficulty falling around 10% in the second week of June. It was the second double-digit decline recorded this year, and both occurred during prolonged periods of below-cost pricing.
To manage expenses, public mining companies sold more than 32,000 Bitcoin during the first quarter, using the proceeds to fund operations.
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