JPMorgan says that the profitability of mining Bitcoin hit a new record low in September

David Pan’s article for Bloomberg News, which cites a report by J.P. Morgan, indicates that profitability for bitcoin mining companies experienced a significant decline in September.

Reginald L. Smith and Charles Pearce, two analysts, noted that the daily block reward gross profit fell 6% from the previous month, which was the lowest point in any “recent record.” Despite a little increase in Bitcoin’s average price, miners have seen their income and earnings decline for three months in a row.

Bitcoin’s halving event in April is contributing to the decline in profitability. The halving, which occurs every four years, reduces the block rewards that miners receive by 50%. This is necessary to prevent inflation and ensure that Bitcoin’s supply remains limited at 21 million tokens. Given the present Bitcoin prices, the mining industry could experience an annual revenue loss of over $10 billion as a consequence of the halving.

Over the years, the Bitcoin mining sector has experienced a significant expansion, with a combined market capitalization of over $20 billion in 14 main U.S.-listed mining companies. Nevertheless, miners encounter an increasing number of obstacles in conjunction with this expansion. Large-scale operators in the United States have increased their competition, which has made it more challenging for individual and lesser mining firms to maintain profitability, in addition to the diminution.

Bitcoin mining necessitates a considerable financial expenditure, as miners invest billions of dollars in specialized apparatus to verify blockchain transactions. With the influx of additional computing power into the network, the probability of individual miners effectively earning rewards decreases.

Over the course of the year, the stock prices of major U.S. miners MARA Holdings Inc. and Riot Platforms Inc. have plummeted by 36% and 54%, respectively, indicating the unmistakable impact on the mining industry.

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