Several months ago, Bitcoin mining was a highly profitable activity in the cryptocurrency industry due to its lucrative returns. As a Bitcoin miner, you receive rewards for verifying blocks or transactions.
However, the profitability of this venture is fast fading as the rewards miners get for approving these transactions on the proof-of-work protocol have reduced drastically. There are also speculations that Bitcoin mining profitability in 2023 is at an all-time low. One of the factors to consider before going into Bitcoin mining is the power supply. Power supply plays an important role, as it determines whether one can effectively engage in mining.
Most of the time, miners' profits from approving transactions are used to settle these power supply bills. But now, the Bitcoin mining rate for the rewards is meager, making the endeavor nearly unprofitable.
Furthermore, Bitcoin price for the past months has been down. Now, on-chain data even supports the notion of Bitcoin mining profitability being down. What should miners do? Does the business hope to be profitable, or is it time to call it a day?
Mining and Hash Rate Difficulty Plague Miners
The crypto industry expects the upcoming Bitcoin halving in 2024, so it is not a good time for miners. As the day passes, the number of rewards they get from their endeavor declines by massive margins.
The hash rate primarily measures the performance and security of the Bitcoin network. When the number of hash rates increases, it broadly signifies the security and performance of the Bitcoin network are on the rise. But for miners, it is a whole different story, as it means the amount of money they earn from mining Bitcoin will reduce.
The 30-day moving average for the Bitcoin mining hash rate has increased significantly, reaching new heights. Based on on-chain data, the current Bitcoin mining rate has reached an all-time high and is expected to break even more records in the future. Currently, the Bitcoin hash mining rate is around 400 million TH/s.
A good overview of the charts shows a specific time when the mining rate of Bitcoin decreased with regard to macro environment factors. For instance, when China banned Bitcoin, the mining rate went down to around the 165 TH/s to 96 TH/s range. Note that when the hash rate of Bitcoin mining increases, the difficulty of mining Bitcoin is also on the rise; the same thing applies when the hash rate of Bitcoin decreases. Since the Bitcoin mining rate is touching new levels at an all-time high, the difficulty is following the same path.
Hash Price is Reaching New Lows
The hash price of Bitcoin is the reward miners receive for verifying transactions. Recent data suggests that the hash price is reaching new lows.
The hash rate for Bitcoin seems to decrease with each halving event, which occurs every four years in the cryptocurrency industry. The most recent halving for Bitcoin occurred in 2020, meaning the next one is expected to occur in 2024. Currently,
Bitcoin's hash rate is at 6.25 BTC, but it will drop to 3.125 BTC after the next halving event occurs next year.