Mining profitability is under pressure as network competition reaches historic levels and margins shrink.
According to a recent report from The Miner Mag, the bitcoin mining sector is going through a phase of growing economic difficulty, marked by increasingly intense competition on the network and unfavorable market conditions.
Miners are facing a complex situation: while the network hashrate – the indicator that measures the total computing power dedicated to securing the network – reached an all-time high of 1.16 ZH/s in October, the price of BTC fell toward $81,000 in November.
Hashprice drop and shrinking margins
Hashprice, which represents miners’ revenue per unit of computing power, has fallen below $36 per hash, placing it below the median of $45 per PH/s recorded by publicly listed mining companies. This decline is pushing several operators close to break-even levels, putting the economic sustainability of their operations at risk.
The report also highlights that the payback period for mining equipment has extended beyond 1,200 days, while financing costs continue to rise across the sector.
The deterioration in conditions comes after a relatively stable third quarter, during which hashprice averaged around $55 per PH/s, supported by a bitcoin price near $110,000. The increase in network competition and the drop in BTC price in early November have brought mining profitability to the lowest levels ever recorded.
The financial challenges have been accompanied by increased debt among miners, driven mainly by a wave of near-zero coupon convertible bonds issued in the last quarter.
Although miners are accelerating their transition toward artificial intelligence and high-performance computing (HPC), revenues from these services remain too limited to offset the sharp decline in mining-related income, according to the analysis.
