- Bitcoin mining is not bringing profits: worst revenues in 11 months
- Record highs to record lows - just like the Bitcoin price
- Resourceful miners look for different ways and strategy helping them make money
Bitcoin mining is not bringing profits: worst revenues in 11 months
Mining cryptocurrency has become a trend. This is the easier way to make a digital fortune. Cybercriminals rely on this method to make malware that can be spread around and installed on different machines to make money for malicious actors.
Particular countries try to revive their state's economy by allowing this process and legalizing cryptocurrency mining. Russia recently took such a step to make the country more alive economically because causing conflict with Ukraine and the West has not been good for the country's other issues.
However, despite the process's growing popularity and attractive results, the results have not been that good. Recently, Bitcoin miners reported their worst time of the year. August 2024 was a challenging month for Bitcoin miners, marking their lowest earnings since September of the previous year[1].
Last month, they earned less money than any other month in 2024, earning only $827.56 million. This was a significant drop from July's $927.35 million. Furthermore, despite the low earnings in August, they were still a slight improvement from the same month last year, with a 5% increase from August 2023's earnings, according to data from Bitbo.
Record highs to record lows - just like the Bitcoin price
The decrease in earnings can be traced back to March 2024, when Bitcoin's value reached a record high of over $73,500. In that month, miners earned nearly $1.93 billion. Comparatively, the amount mined in August represented a dramatic 57% decrease from March. The price of this cryptocurrency has been showing very low lows and highest highs in a matter of months.
What is the reason behind these lower earnings? Bitcoin miners faced several challenges. For one, fewer Bitcoins were mined in August—13,843 BTC compared to July's 14,725 BTC. They also dealt with fewer transactions and an increase in mining difficulty. This difficulty spiked especially after April, when the rewards for mining a block of Bitcoin were halved, reducing the reward from 6.25 BTC to 3.125 BTC.
Despite these hurdles, Bitcoin's price has seen a significant rise since then, reaching $57,315 at the time of writing. This is more than double its value back in September 2023, around $25,000. According to data from Bitbo and Blockchain.com, in August 2024, the average fees included in Bitcoin mining rewards made up about 2% of the total reward per block.
Meanwhile, the number of daily confirmed Bitcoin transactions reached its highest point for the year on July 31, with nearly 631,648 transactions. However, by the end of August, this number had decreased slightly to 594,871.
The task of mining Bitcoin has become increasingly difficult. In August, the mining difficulty reached a new record of 89.47 trillion, a rise from 86.87 trillion in July. This indicates it's getting harder to mine new Bitcoins[2].
Resourceful miners look for different ways and strategy helping them make money
Because mining is becoming less profitable, some miners are looking for other ways to use their computing power. One growing trend is for miners to support artificial intelligence projects. Some of these partnerships have brought in billions of dollars for the miners.
Mining Bitcoin has become more challenging and less profitable, but some miners are adapting by finding new and lucrative ways to use their resources. They have adopted the new strategy - Michael Saylor's BTC strategy, to be exact. Billionaire Michael Saylor was one of the first to buy large amounts of Bitcoin using borrowed money for his software company, MicroStrategy. This made his company one of the world’s biggest Bitcoin holders.
Now, another company is trying something similar, but with a twist. Marathon Digital, a company that mines Bitcoin, has decided to buy Bitcoin directly instead of investing in more mining equipment. Last month, they raised $300 million by selling convertible notes—bonds that can be changed into stock—and used most of that money to buy 4,144 bitcoins[3].
This decision came because the current profits from mining are not very high. The "hash price," which measures how much miners earn, is low. So, Marathon thinks their shareholders should buy Bitcoin directly with borrowed money until mining becomes profitable again.
When MicroStrategy started buying lots of Bitcoin in 2020, people criticized the move, especially when Bitcoin prices dropped in 2022, and the company’s investment seemed to lose value. However, no one is criticizing them now, as the value of their Bitcoin has greatly increased, worth billions more than what was paid.
MicroStrategy and Marathon initially followed similar stock market paths, with their stock prices moving closely with Bitcoin's price. This was appealing before Bitcoin ETFs (exchange-traded funds) were available. But this year, their paths have diverged. MicroStrategy’s stock has jumped 90% as it closely follows Bitcoin's price.
On the other hand, Marathon’s stock has dropped about 40% as Bitcoin mining has become much tougher. The April Bitcoin halving event, which cut the mining reward in half, has made earning money from mining more difficult. It is unclear what else can change.
