Bitcoin Surges in Profitability, But Miners Face Tightening Margins

• Bitcoin’s supply in profit surged by 3M BTC in 20 days, signaling a bullish trend as prices climbed closer to 19M BTC in profit.
• Miners face pressure as daily revenue drops for the third month, despite Bitcoin’s rising price and hashrate gains in September.
• Market volatility fell to 44% in September, possibly stabilizing conditions, but lower transaction fees limit mining profitability.

Bitcoin’s profitability surged in September, with 3 million BTC returning to profit within the last 20 days. This shift, attributed to a rise in the coin’s value, positions the market for potential excitement as further price increases may push the supply in profit past 19 million BTC. Investors, particularly those who have waited six months for such developments, are now navigating the pressure of holding or selling as prices climb.

Challenges Facing Miners

However, despite this bullish phase, there are notable challenges. For the third consecutive month, Bitcoin miners’ daily revenue dropped, according to a JPMorgan analysis. With a 2% increase, the network’s hashrate reached 643 exahashes per second (EH/s). 

While this is a positive sign, daily block reward revenue dropped by 6% month-on-month (m/m), with miners earning an average of $42,100 per EH/s. This decline signals a tightening profit margin for mining operations, despite Bitcoin’s positive price momentum.

Market Stability and Volatility Trends

Moreover, JPMorgan also highlighted a drop in Bitcoin’s volatility, falling from 62% in August to 44% in September. This decrease may suggest stabilization in market conditions. Still, lower volatility often reduces trading opportunities, which can contribute to decreasing transaction fees. September saw mining fees remain subdued, accounting for less than 5% of the block reward.

Among U.S.-listed mining businesses, Hut 8 performed exceptionally well, increasing its market capitalization by 21%. Conversely, CleanSpark experienced a 13% decrease, which is indicative of larger issues facing the industry.

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While Bitcoin’s short-term profitability has increased, mining revenues and margins are under strain. However, a key takeaway remains: further price increases could spark significant market activity as the supply in profit exceeds 19 million BTC, setting the stage for more market volatility.