JPMorgan reports that Bitcoin mining profitability hit a recent record low in September

According to an article by David Pan for Bloomberg News, in which he cites a report from JP Morgan, Bitcoin mining companies experienced a sharp decline in profitability in September.

Analysts Reginald L. Smith and Charles Pearce noted that the daily block reward gross profit fell 6% compared to the previous month, marking the lowest point in the “recent record.” This was the third consecutive month in which miner revenue and profits fell, even as the average price of Bitcoin increased slightly.

The decline in profitability is related to the Bitcoin halving that took place in April. The halving, which occurs every four years, reduces the block rewards miners receive by 50%, cutting miners’ revenue to prevent inflation and ensure that the supply of Bitcoin remains capped at 21 million tokens. Based on current Bitcoin prices, the halving could result in over $10 billion in annual revenue loss for the mining industry.

The Bitcoin mining sector has grown dramatically over the years. 14 major US-listed mining companies now have a combined market capitalization of over $20 billion. But alongside this growth, miners are facing ever greater challenges. In addition to the halving, increased competition from large operators in the US has made it more difficult for individual and smaller mining companies to maintain profitability.

Bitcoin mining requires significant financial investment as miners spend billions of dollars on specialized equipment to validate blockchain transactions. The more computing power floods the network, the less likely individual miners are to successfully receive rewards.

The impact on the mining industry is clear, with major U.S. miners MARA Holdings Inc. and Riot Platforms Inc. seeing their share prices plunge 36% and 54%, respectively, over the year.