Bitcoin mining revenue fell under $1 billion in August due to decreasing investor interest, which led to falling prices as well as difficulty in mining the cryptocurrency.
Bitcoin mining revenue has brought huge profits to crypto firms such as Bitfury, Bitmain, AntPool, Core Scientific Inc., Marathon Digital Holdings Inc., and Riot Blockchain Inc. over the years.
Within the last four months, starting from May when prices of digital assets reached new lows buoyed by the collapse of the TerraUSD (UST) stablecoin which powered the Terra ecosystem, mining revenue has been on a downward spiral.
Despite a 10% rise in revenue from $597.35 million in July to approximately $657 million in Aug., per the Block based on data from Coin Metric, revenue from the largest cryptocurrency by market capitalization remained far below the $1 billion threshold miners became accustomed to in 2021.
Source: Bitcoin Miner Revenue Chart by the Block
Due to how mining revenue is calculated, much of the decline has been attributed to a relatively smaller price range of BTC throughout the eighth month of the year.
Mining revenue is calculated by multiplying the total number of BTC earned as rewards by the price of the digital asset within a given period. In Aug. 2022, BTC traded in the price range of $19,600.79 and $25,135.59 after opening and closing the month at prices of $23,336.72 and $20,049.76 respectively.
Source: BTCUSD Chart for Aug. 2022 by TradingView
The highest daily Bitcoin miners’ revenue was $24.65 million on Aug. 19, YChart data showed.
Bitcoin miner revenue sees year-over-year low
Like most months before Aug., BTC saw a yearly decline in revenue. Miner revenue in Aug. 2021 was around $1.4 billion, and total rewards earned from last month was a 53% decrease from this value. Within the period, BTC traded in the range of $37,458 and $50,482, according to data from CoinMarketCap.
Source: BTC/USD Chart for Aug. 2021 by TradingView
Mining difficulty has also affected profitability
Bitcoin became extremely harder to mine last month. BTC mining difficulty spiked by 9% over the last three weeks, from 28.17 trillion on Aug. 4 to 30.98 trillion on Aug. 31, BTC.com data showed.
While difficulty in mining indicates a strong and growing network, it also leads to slimmer profits as more computing power is needed, but the value of the coin remained below $26,000.
Source: Bitcoin Mining Difficulty Chart by BTC.com
BTC Market Capitalization Shed More than $60 million
The market value of BTC continues to fall, and August was no different. After making several attempts at recovery in July, BTC opened on Aug. 1 with a market capitalization of $445.23 billion, plunged by 13%, and closed the month with a new market value of $383.71 billion. This saw $61.82 billion wiped off within 30 days.
Source: BTC Market Capitalization Chart for Aug. 2022 by TradingView
Why are miners turning away from BTC?
With Ethereum’s transition to a Proof-of-Stake (POS) network, Bitcoin should remain the sole Proof-of-Work (PoW) coin. Miners should be rushing to mine BTC, but why are revenues far below expectations?
Ilman Shazhaev, CEO of Farcana (blockchain gaming Metaverse) told BeInCrypto, “Currently, the most efficient equipment on the Bitcoin mining market at average electricity rates shows a 50/50 profitability. That is, 50-60% of the profit goes to the electricity bills, and the rest stays in the hands of miners. These figures are not bad: for example, Ethereum is withdrawing from its usual mining scheme. With the relatively low price of Bitcoin, the network complexity remains relatively high, which was unexpected for the whole mining market. Current Ethereum miners will only switch to Bitcoin after the PoS transition if the network complexity decreases to what it was in mid-2021 and if the market becomes bullish.”