Bitcoin Mining Profitability Plummets by 75% in Just 3 Years

Bitcoin mining was among the most lucrative ventures in the crypto industry for early adopters and investors. However, according to Stocklytics.com, profits have crunched by 75% in the last three years.

Speaking on the data, Edith Reads, a financial analyst from Stocklytics, said:

Bitcoin mining is becoming less profitable day after day due to various factors including cost of mining. Also, halvings are anticipated events, but their impact on mining profitability is profound. With each halving, miners receive fewer bitcoins for their efforts.

Stocklytics Financial Analyst, Edith Reads

Bitcoin Mining Profit Trends

Bitcoin mining profits stood at 0.39 USD/day for 1 TH/s in March 2021 compared to 0.1 USD/day for 1 TH/s in March 2024. The pattern reveals a 75% fall in profits associated with mining.

The metric to gauge Bitcoin mining profits is hash price, denoted in dollars per terrahash (USD/TH). This value is driven by factors such as BTC price, transaction fees, network complexity, and potential block subsidies.

December 2017 saw a crypto market surge, leading to high crypto returns. Bitcoin’s gains reached their peak at around $3.39/TH per second. Despite declining mining profitability in 2021, the BTC hash price was $0.412/TH per second.

Currently, Bitcoin’s network hash rate remains at 520.0 million TH/s, an impressive increase from  76.5 million TH/s in 2017.

Mining Profits on the drop

Similar to the extraction of traditional commodities like gold or copper, Bitcoin mining operations tend to yield higher profits during periods of elevated asset prices. However, the profitability of Bitcoin mining is influenced by many factors, including energy expenditures and transaction fees.

For instance, the process of bitcoin mining consumes around 139 electric terawatts annually.

This figure is higher than the amount of energy used by countries such as Norway in a year. The electricity cost directly impacts miners’ profitability, with higher energy expenses translating to diminished returns.

Further challenges to mining profitability loom on the horizon, particularly with the impending fourth halving scheduled for the 20th of this month. After this event, miners will see their rewards decrease from 6.25 Bitcoins per block to 3.125. This reduction aligns with Bitcoin’s predetermined structure, which gradually diminishes block rewards until the total supply of 21 million Bitcoins is reached.

The halving mechanism plays a crucial role in underpinning Bitcoin’s price, a trend that has historically been observed following the first three halvings.