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In March 2024, the Bitcoin mining industry saw strong growth, fueled by cryptocurrency prices soaring to record levels, which in turn boosted mining profitability, according to a report by JPMorgan (NYSE:JPM).
The analysis comes at a crucial time as the industry anticipates the Bitcoin halving event scheduled for April 16, 2024, which is expected to impact miners' rewards and overall profitability.
Bitcoin's price surged to an average of nearly $67,600 in March, marking the highest level on record, and concluded the month with a seven-day rolling average price around $69,900. This price increase represents a 25% jump from the previous month, with annualized volatility jumping to 65% in March from 42% in February.
The network's average daily hashrate, a measure of the computational power used for mining and transaction processing, reached a new peak of 600 EH/s (exahash per second) in March. The figure reflects a 4% increase from February and an 80% year-over-year growth. This increase in hashrate indicates not only a growing competition among miners but also the industry's resilience and optimism, the report notes.
Despite the positive trends, the upcoming Bitcoin halving event, which will reduce the block reward from 6.25 to 3.125 bitcoins, casts uncertainty over future mining profitability. JPMorgan's report suggests that the halving could lead to a decline in profitability in April unless offset by a strong rally in Bitcoin's price or a dramatic decrease in the network hashrate.
The average daily block reward revenue per exahash for miners was estimated at $100,400 in March, the highest since August 2022, representing a 33% sequential increase. This spike in profitability was attributed to the Bitcoin price appreciation outpacing the growth in network hashrate.
The report also touched on the performance of U.S.-listed Bitcoin mining companies, noting that the aggregate market cap of 14 tracked miners increased by 3% month-over-month to $20 billion. This figure represents 42% of the four-year revenue opportunity, according to JPMorgan's calculations.
Among the listed companies, Cipher Mining Inc (NASDAQ:CIFR) emerged as the best performer with a 74% increase, while Bitfarms Ltd (NASDAQ:BITF) fell by 22%, marking it as the month's least favorable stock.
