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Bitcoin miners’ profitability surges on back of BTC rally


With Bitcoin mining facing significant scrutiny in recent weeks, the revenue for miners has also taken a hit. However, with the asset’s recent price rally, miners are slowly returning to profitability.

Data acquired by cryptocurrency trading simulator Crypto Parrot indicates that the Bitcoin mining revenue surged 179.4% over the last 30 days. On June 27, miners earned $13.06 million, while on July 26, the figure was $36.49 million. Cumulatively, the revenue for the 30 days stood at $841 million.

Elsewhere, the revenue for the last 30 days represents a drop of 51.47% compared to the $1.7 billion earnings between March 27 and April 26. During this period, Bitcoin was still on a bull run powered by investments from institutions. As of December 2020, miners earned $1.2 billion.

Bitcoin mining revenue increased amid the asset’s price volatility. As the asset struggled to trade around the $30,000 support level, the revenue remained low. Elsewhere, with Bitcoin showing signs of resurgence towards the $40,000 mark, the mining revenue has increased.

Bitcoin mining revenue still at risk

The report highlights the significance of the Bitcoin mining revenue in recent years. According to the research report:

“Based on the recent Bitcoin price movement, the mining revenue is encouraging, considering that the sector has also experienced a general decline in profitability over recent years. However, with the regulatory crackdown on mining and the carbon footprint concerns, the industry risks losing this year’s gains.”

The main focus on Bitcoin mining has been on the carbon footprint. However, with miners increasingly focusing on renewable sources of energy, fortunes for miners should improve.

The number of listed miners already trading on stock exchanges keeps going up. There are already established US mining plays like Riot Blockchain (NASDAQ:RIOT), which was founded back in 2000. Riot Blockchain stock almost hit $80 back in March but have since descended to a range of $22-$36.

In the UK there has been a lot of interest in Argo Blockchain, for example. Shares in Argo Blockchain (LSE:ARB) hit £2.80 in March but like Riot have since dropped back, in this case to around £1.28. A surge in profitability and another rally in Bitcoin could well see these prices heading back to their 52 week highs.

China Bitcoin mining crackdown plays into hands of other miners

Other factors are also in play. China has now cracked down on Bitcoin mining activities within its territory, which took a large chunk of the mining capacity off the table in one fell swoop. The Bitcoin algorithm has also been adjusted in order to ensure that capacity is not completely undermined by Beijing. This all amounts to more cash going to those miners who still remain operational.

China’s move reduced the global hash rate – the collective Bitcoin mining capacity – by approximately 50%. Some industry estimates put this even higher. It has also meant that the time taken to mine a ‘block’ has stretched out from 10 minutes to as long as 19 minutes.

However the BTC mining algorithm has now adjusted to compensate for the shortfall, meaning average mining times are back into the 10 minute range. Fewer miners and less difficulty in the mining task mean that Bitcoin miners, even smaller ones, are going to be well placed to profit in the next few months.

Revenues and profitability of miners way up

Some analysts are estimating rises in daily revenues in the 5-8% range. While the price of Bitcoin has dropped from its peak, revenues from miners themselves have fallen less. Overall profitability margins are soaring. Those companies still in the business outside China are also using more efficient equipment than much of the legacy kit Chinese miners were employing.

As for the China Bitcoin mining industry itself, there remains speculation that Beijing may reverse its decision, but here at The Armchair Trader we doubt that. Much of the equipment used by Chinese miners is even now being moved to new premises, with Russia being seen as a favoured alternative location.

From an investor perspective, this makes BTC miners look like a less volatile method of tapping into the growth in uptake of Bitcoin. In many ways, China has done the cryptocurrency industry a favour.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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