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Bitcoin miners’ earnings rise over $40 million a day

Far from slowing down, Bitcoin mining profitability keeps growing even after the last difficulty increase. Additionally, miners are accumulating their coins rather than selling, which provides an additional boost to the upward trend.

The reasons behind the profitability increase

Bitcoin is off to a bullish start of Q4. In the first week of October, mining revenue increased between $40 and $50 million per day.

The last difficulty increase of 4.71% wasn’t enough to impact profitability, and Bitcoin miners are enjoying another week of exceptionally high revenue in dollars.

Bitcoin miner revenue daily (Source: Coin Metrics).

Although many factors are involved, the primary reason for these profits is the increase in the block subsidies’ dollar value, in turn driven by the bitcoin’s price surge from $50,000 to over $55,000.

Block subsidies are currently 6.25 BTC per block. At $55K per bitcoin, that means an increase from $312,500 to $343,750 for each block found — without counting transaction fees.

Hashrate, difficulty, and transaction count

Ever since the miners’ exodus from China after the ban, the Bitcoin community has closely followed hashrate movements.

Hashrate bottomed at 57M TH/s in July and has started a slow but steady recovery since then. Currently, a total of 140M TH/s, is working on the Bitcoin network — only 30% away from the 198M TH/s all-time high before the Chinese ban.

The gradual reconnection of hashrate has led to six consecutive difficulty increases. However, these adjustments have been slow-paced compared to bitcoin’s price action. As a result, profitability hasn’t been — too — affected.

Bitcoin mining difficulty. Notice the last sixth increases since August (Source: Coin Metrics).

As long as the bitcoin price keeps its upward trend and rises faster than difficulty, mining profitability will keep increasing. Of course, this won’t last forever, but the hashrate growth rate and price action seem to indicate that we may still enjoy some more months of high mining revenue.

Interested in this exceptional Bitcoin mining profitability period? Read more about it in our article below.

The bad news is that mining revenue is 97% composed of block subsidies and only 3% transaction fees. This shouldn’t be something to worry about in the short term, but it would be healthy to start seeing growth in the network’s usage and transactions thinking long-term.

If you want to learn more about how mining revenue works, consider reading our article on the matter. You can visit it through the link below.

The next halving will happen in 2024 when block subsidies and bitcoin emission drops to 3.150 BTC per block. To keep miners incentivized to provide security and confirmations to the network, we will either need bitcoin to keep appreciating or a significant increase in usage, which will, in turn, bring more revenue from transaction fees.

Bitcoin miners’ revenue breakdown (Source: Coin Metrics).

Miner accumulation; a bullish sign?

An increase in mining revenue is a double-edged sword. It can drive interest in mining, further attracting more people to Bitcoin. However, it also gives miners more significant influence over price since they concentrate a larger portion of the market capitalization.

According to Coin Metrics, miners hold a total of 1.8M bitcoin — an 8.5% of the total supply, equal to $99 billion in bitcoin.

In a hypothetical situation where a large portion of the miners decides to take profits, that would lead to a massive sell wall that would drive the price down.

However, that doesn’t seem to be the case — quite the opposite. The last two years have reverted a historical trend of miners selling their earned bitcoin. 2021 has seen sustained growth of mining entities balances since as early as February.

Miner accumulation suppresses the inflationary effect of new bitcoin entering circulation, as those coins are kept in the miners’ wallets instead of entering the market. Indeed, it is a positive indicator for a prolonged upwards run.

Bitcoin miners’ holdings since the start of 2021 (Source: Coin Metrics).

Final considerations

2021 was — and still is — a critical year for Bitcoin and, most importantly, miners. Many unprecedented events led to a rearrangement of the industry and the landscape. Additionally, considering the current hashrate levels, we are far from over.

That said, the change has been positive so far. Miners worldwide are enjoying exceptional profitability — besides those who had to shut down due to government crackdowns. Good revenue is always a positive sign, as it keeps the incentives to provide security to the network high.

The accumulation trend also indicates that they’re optimistic about the future, as they’d rather keep their bitcoin instead of selling it, even at increased profits.

The increase in profitability has also spiked the interest in mining, both from newcomers and already existing miners. Many enterprise-level Bitcoin corporations have either expanded or are looking to do so. Retail services have also faced increasing demand. At these profit rates, we might even see the start of a new era of domestic mining.

So if you were thinking about mining but weren’t quite sure yet, this might be the opportunity you were waiting for.

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An extensive library of newsworthy, analytical, and educational content regarding cryptocurrency and crypto mining. By Lumerin Protocol, built by Titan Mining.

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Lumerin Protocol

Making crypto mining hashpower a tradeable commodity. Built by Titan Mining. Visit us on https://lumerin.io/.

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