Bitcoin network hashrate, a closely related yet distinct metric, is currently at 89.4 trillion and historically high levels.
On September 1, 2024, the Bitcoin network hashrate, the total computing capacity that secures the Bitcoin network, reached a new all-time high of over 742 exahashes per second (EH/s).
The Bitcoin network hashrate has been consistently increasing since 2021, as evidenced by data from CryptoQuant. This trend is consistent with transitioning to more advanced mining hardware, such as application-specific integrated circuits (ASICs).
The cost of mining Bitcoin increases as the network hashrate increases, necessitating miners to upgrade to more powerful mining devices, expand operations, and consume more energy to remain competitive.
Economic strain on the mining industry
The revenue of miners remains plagued by the high difficulty rate and the increased Bitcoin network hashrate. August 2024 was the most unfavorable month for miner profitability since September 2023, as revenue plummeted to a mere $827.56 million.
A recent JP Morgan report also documented the financial challenges that miners were experiencing. The report disclosed that miners were experiencing a revenue squeeze from various sources, including a reduced block subsidy and increased energy costs.
According to the report, MARA and Riot Platforms had the highest expenses per Bitcoin of the five Bitcoin mining companies analyzed, with an estimated $55,700 and $62,000, respectively.
Mining companies must evaluate various alternatives to sustain their operations and increase revenue in response to these elevated expenses and diminished revenues. To mitigate elevated debt-to-equity ratios, numerous mining organizations are transitioning from issuing corporate debt to providing equity to investors.
Other Bitcoin mining companies are contemplating diversifying their operations into high-performance computing and artificial intelligence to compensate for revenue shortfalls in the mining sector. This involves allocating a minimum of their computing capacity and physical facilities to information processing data centers.
Is renewable energy the solution to cost-offsetting?
Companies such as MARA, formerly Marathon Digital, are also investigating renewable energy to remain competitive in a challenging mining environment. MARA has conducted experiments with landfill-gas-to-energy systems, which convert methane gas from refuse landfills into usable energy.
A deal was also signed by the mining giant with the Kenyan government to develop the country’s renewable energy infrastructure. This move suggests that the company may begin sourcing more energy requirements from sustainable sources.
