In a boost for the Bitcoin mining industry, a new research report from JPMorgan indicates that mining economics significantly improved in the first half of November. The value of Bitcoin’s hashrate, a key measure of mining profitability, surged nearly 30% as rising Bitcoin prices outpaced growth in network hashrate and transaction fees increased as a percentage of block rewards.
Miner Market Caps Jump 33%
The JPMorgan report, authored by analysts Reginald Smith and Charles Pierce, also highlighted a major rise in the total market capitalization of the mining companies the bank tracks. From October 31 to November 15, miner market caps jumped by 33%, or roughly $8 billion, driven by the Bitcoin price rally and broader optimism in the crypto markets following the US elections.
Network Hashrate Climbs, US Miners Gain Share
Bitcoin’s network hashrate, which represents the total combined computational power being used to mine and process transactions on the blockchain, increased by 2% since the start of the month to an average of 718 exahashes per second (EH/s). The 14 US-based miners covered by JPMorgan now account for approximately 28% of the global hashrate, a record high share.
The mining industry is recovering strongly from the dual impact of the Bitcoin halving event in May and COVID-19 related disruptions. We expect continued growth and consolidation, especially among the more efficient miners with access to low-cost power.
— Mining industry executive who wished to remain anonymous
Bitcoin Price Rally Powers Profitability
The price of Bitcoin, the world’s largest cryptocurrency, surged over 30% to new all-time highs in the wake of Donald Trump’s victory in the US presidential election earlier this month. This price appreciation has been a key driver of improved miner economics. When Bitcoin’s price rises faster than the growth in hashrate, miner profit margins expand.
- Bitcoin’s price is up over 130% year-to-date
- Network hashrate has grown 38% in 2024
- Miners earn 6.25 BTC per block, plus transaction fees
Implications for the Mining Industry
The recent surge in mining economics bodes well for the industry and could spur further investment and growth, especially in the US. With American miners now controlling over a quarter of the global hashrate, the US has cemented its position as a major mining hub. Some potential impacts of improving profitability:
- Greater investment in mining infrastructure and equipment
- Acceleration of industry consolidation as larger miners acquire smaller players
- Increased focus on renewable energy to power mining operations
- Potential for more crypto-friendly regulation to support the domestic mining sector
As Bitcoin continues its bull run and institutional adoption grows, the mining industry appears well-positioned to benefit from rising prices and hashrate. However, the sector remains dynamic and competitive, with constant innovation in mining hardware, energy sourcing, and operational efficiency separating the winners from the losers. Successful miners will need to stay at the forefront of these trends to thrive in the coming years.
