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Cryptocurrency News Articles
Cryptocurrency Crisis: US Bitcoin Miners Hit by Production Plunge and Profitability Crash
May 07, 2024 at 01:54 pm
Hut 8, one of the largest crypto mining companies in the US, reported a 36% decline in BTC mined in April due to equipment relocation. Other major mining firms also experienced production drops, attributed to the halving event that reduced block rewards by half. Despite transaction fees offsetting the impact initially, BTC production rates are expected to decline further as profitability has slumped to $0.05 per terahash per second per day, down 72% from its recent highs.
Bitcoin Mining Woes: Production Plunges and Profitability Evaporates
As the cryptocurrency market grapples with uncertainty, America's leading Bitcoin miners have succumbed to a sharp decline in production, coupled with a severe slump in profitability.
Production Nosedive
Hut 8, one of the largest crypto mining giants in the United States, reported a staggering 36% drop in Bitcoin (BTC) mined in April compared to March. The company's proprietary production fell from 231 BTC to 148 BTC, primarily due to the relocation of over 25,000 mining machines.
The production decline was not limited to Hut 8 alone. According to The Miner Mag, other major Bitcoin mining companies such as Bitfarms, Cipher, CleanSpark, Core Scientific, Riot, and Terawulf also experienced production reductions ranging from 6% to 12% in April.
The halving event on April 20, which reduced the block reward by half to 3.125 BTC, significantly impacted mining output. The daily production of BTC dropped from 900 to around 450.
Profitability Slump
The reduced production has been compounded by a precipitous decline in profitability for Bitcoin miners. The hash price, which represents the revenue earned per terahash per second per day, has plummeted by 72% since the halving.
Currently, the hash price stands at a mere $0.05 per terahash per second per day, a far cry from its 2021 high of $0.400. This 87.5% drop in profitability has severely impacted the financial viability of Bitcoin mining operations.
Transaction Fees to the Rescue?
Amidst the gloom, transaction fees have emerged as a beacon of hope for Bitcoin miners. In the last four weeks, transaction fees have accounted for over 7% of miners' total revenue, a significant increase from 1% two years ago.
This trend suggests that Bitcoin users are increasingly willing to pay higher fees to secure faster transaction confirmations. If this trend continues, it could potentially strengthen the network's fundamentals and provide some respite for miners.
Industry Outlook
The current challenges facing Bitcoin miners are likely to persist for the foreseeable future. The halving has effectively reduced the profitability of mining operations, while the overall market downturn has created uncertainty and volatility.
However, the industry remains optimistic about the long-term prospects of Bitcoin mining. Major miners, such as Riot Blockchain, continue to invest heavily in expanding their operations and improving their efficiency.
As the cryptocurrency market recovers and the halving impact diminishes, Bitcoin mining is expected to regain its profitability and continue to play a crucial role in securing the Bitcoin network.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
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