Bitcoin’s mining sector faced significant profitability challenges in November, signaling a widening disconnect between the cryptocurrency’s stable price and the internal pressures on miners, according to a new report from JPMorgan.
Gross block reward profitability for Bitcoin miners plummeted 26% month-over-month. This marked the fourth consecutive monthly decline for the industry.
The daily income averaged by miners was $41,400 per exahash per second (EH/s) in November. This figure represents a 14% drop from October and a 20% year-over-year decrease.
JPMorgan analysts Reginald Smith and Charles Pearce highlighted the intensifying pressure on the mining industry. High competition and rising operational costs are key factors.
The combined market capitalization of 14 U.S. mining companies monitored by JPMorgan fell 16% month-over-month. Their total market value stood at $59 billion.
This decline occurred despite Bitcoin’s price maintaining elevated levels throughout November. It underscores the competitive nature of the sector.
The network’s average hashrate saw a slight 1% decrease in November compared to October. The hashrate, which measures the total computational power securing the network, had reached an all-time high in the previous month.
Individual company performances varied sharply. Cipher Mining registered a 9% advance, a gain attributed to a recent agreement with Fluidstack.
Conversely, Bitdeer experienced a notable 40% contraction during the same period. The report did not specify the exact reasons for Bitdeer’s decline.
Analysts suggest the continuous fall in profitability could lead to a reorganization within the mining market if current trends persist. Previous cycles have forced some operators to modernize equipment or seek better energy deals.
The report also noted that increasing competition continues to raise investment requirements. This forces mining companies to meticulously evaluate their costs.
For investors, the data indicates that the mining sector’s performance does not always align with Bitcoin’s price trajectory. This divergence is crucial for understanding the industry’s health beyond price cycles.