BT Daily News: Bitcoin Miner Cumulative Revenue Tops $50B, Aggregate Profit at 37%
1. Bitcoin Miner Cumulative Revenue Tops $50B, Aggregate Profit at 37%
Bitcoin mining is still a highly profitable business despite its drawbacks. Moreover, the total cumulative revenue for BTC miners has just reached a new milestone.On-chain analytics provider Glassnode has reported that Bitcoin miners have earned total revenue of $50.2 billion from the block subsidy and fees.
The figures are cumulative and calculated since inception when Bitcoin mining began with the genesis block way back in 2009.
Furthermore, the cumulative miner production cost is $36.6 billion, according to Glassnode. This means that there is an all-time-aggregate profit margin for Bitcoin miners at $13.6 billion. As a percentage, this works out at 37%, making BTC mining a highly profitable venture over the years.
Bitcoin Mining Profitability Recovering
However, things have not been so rosy for Bitcoin miners as of late. Profitability has slumped more than 50% over the past year, according to Hashrate Index.
Furthermore, mining profitability or hash price is down 80% since the crypto market peak in late 2021.
The current hash price, which is calculated in dollars per terahash per second per day, is $0.083 as of May 2. The good news is that it is climbing and has gained 50% since its low of $0.055 in November 2022.
Moreover, the increase in Bitcoin prices this year has resulted in more mining hardware coming online. However, this has pushed hash rates and difficulty to peak levels.
According to Blockchain.com data, the hash rate is currently 345 EH/s (exahashes per second). A recent spike to 393 EH/s closed in on its late March all-time high of just under 400 EH/s.
The difficulty metric, or how much computational power is needed to discover a block, is also at a peak level of 48.7T.
Public mining companies have seen their stocks outperform major tech stocks this year. Firms such as Core Scientific, Digihost, Cipher, and Riot, have enjoyed three-figure share price surges in the first quarter.
However, mining stocks are largely correlated to Bitcoin prices which have retreated 8% since the 2023 high in mid-April.
Marathon Digital Sued
Earlier this week, BeInCrypto reported that Marathon Digital Holdings was facing legal action in the ongoing litigation war against crypto companies.
The lawsuit, filed on behalf of shareholders, alleges the firm made misleading statements, failing to disclose information relevant to its financial condition.
Shareholders should have little to complain about since company stock (MARA) has gained a whopping 180% so far this year.
2. Bitcoin Hashrate Reaches New All-Time High: Network Stronger Than Ever
Great news from a fundamental perspective for Bitcoin as it hits a new hashrate high and increases network security.While the price of BTC is in limbo as it decides which way to go, the computing power of the network continues to grow, showing that there is continued interest from miners to perform block validation activity.
In addition, there is other on-chain data that indicates great strength for bitcoin’s blockchain infrastructure.
Bitcoin Hashrate Marks New ATH
On May 2, 2023, Bitcoin’s hashrate, or the measure of the network’s computing power, reached a new high of 491.15 EH/s at the top of block 787,895.
The computational power of the network has never been higher: during the month of April, we witnessed 5 different occasions when this number dropped below 300 EH/s, but recovered in a short time.
With more and more miners contributing computational power to resolve and include blocks, the network can boast unprecedented security, establishing itself as the most inviolable blockchain in the world.
According to a report by analyst Sam Wouter of River Financial, Bitcoin could climb even higher, reaching the first zetta hash (one trillion hashes per second) by 2025.
The prediction was made taking into account that the computing power of the bitcoin network follows its own logic and is minimally influenced by external factors such as the macroeconomic outlook of the markets, so it could continue to grow even in a prolonged bear market situation.
Meanwhile, as the bitcoin network becomes more secure and impenetrable, the average time for each block in April was slightly above the canonical ten-minute average. This translates to a likely decrease in network difficulty of between 1.22 percent and 2 percent.
The “difficulty adjustment” occurs, on average, every two weeks, and is designed to rebalance the average validation time for each block to bring it back to around ten minutes.
Above-average times, as in the current case, can cause problems for the mempool: yesterday morning, the number of unconfirmed transactions reached a staggering 240,000 as the mempool space filled up.
In about 1 day, the difficulty will change, so we expect to see a reduction in the number of transactions in the mempool waiting to be included in a block.
The World’s Largest Bitcoin Mining Pools
Bitcoin’s network hash rate continues to grow and reach new heights, but have you ever wondered who is contributing the most to this number?
Many years ago, those mining could use hardware with a mining capacity of a few TH/s units to ensure a decent profit from this activity.
However, the sudden rise in the price of BTC in recent years has created conditions where competition has become very high on this front, attracting new players to the world of mining with increasingly powerful and sophisticated hardware.
If in 2018 a miner could make $3-4 profit with only 1 TH/s, today he or she would not even be able to make 50 cents on the dollar.
Increased competition to use faster and faster hardware inevitably led to a situation where the small miner using a “home” GPU would never be able to validate a block and win the block reward of 6.25 BTC.
In order to compete with the rest of the world, individuals had to move to large mining pools that together handle most of the bitcoin hashrate.
The way it works is simple: each user connects to the mining pool of his or her choice, and when that user wins a block reward, the reward is shared proportionally with all participants in the pool.
The biggest mining pools in the world are Foundry, AntPool, Binance Pool, F2Pool and ViaBTC.
On-chain data shows network strength: beyond bitcoin hashrate data
Beyond bitcoin’s hashrate, which is touching increasingly positive levels, there are other data points that show an increasingly strong bitcoin network and bode well for the future.
One figure in particular has reached new all-time highs: the number of daily transactions executed on the bitcoin blockchain.
This number has surpassed the staggering figure of 500,000 transactions executed in 24 hours, surpassing the record set in December 2017 during the bull run in bitcoin prices and the rest of the cryptocurrency market.
The reason for such a rapid increase in the number of daily transactions is actually not due to simple transitions where BTC is sent from one address to another, but to the number of inscriptions performed on the Ordinals protocol, which is used to create NFT-like digital artifacts on the Bitcoin blockchain.
Ordinals has become increasingly popular in recent months, driving a large amount of activity to inscribe individual satoshi and create non-fungible versions of bitcoin, effectively increasing the number of transactions executed daily.
3. Montana Passes Bill Protecting Bitcoin Mining from Undue Requirements
The Montana legislature has passed a bill that protects the right to mine bitcoin, among other provisions. The bill is designed to give Bitcoin miners the right to mine “without being subjected to undue discrimination or requirements.”Bitcoin mining has faced difficulty with regulations at the state and local level before, so this bill provides legal certainty for the industry. Montana is among the first states to provide legal protection for bitcoin mining.
The new legislation would also prohibit discriminatory digital asset mining utility rates, prohibit local government powers related to digital asset mining, and prohibit specific taxation on the use of cryptocurrency as a payment method.
Additionally, the bill provides for digital assets as personal property. According to the bill, the Montana Public Service Commission may not establish a rate classification for digital asset mining, digital asset mining businesses or home digital asset mining that creates unduly discriminatory rates. The bill also states that digital assets used as a method of payment may not be subject to additional taxation or charges by the state or local government.
The bill would help Montana's economy by giving legal certainty to the digital asset mining industry, encouraging investment in Montana, and attracting new businesses to the state. The bill also helps to ensure the stability of Montana's power grid.