In a recent report by JPMorgan, it has been revealed that the monthly average network hashrate for Bitcoin experienced a sequential decline for the first time since December 2022. This downturn is attributed to ongoing pressures on mining economics, particularly affecting inefficient and older ASICs post-halving. Daily mining revenue has plummeted by more than 50% below pre-halving levels, which is expected to impede hashrate growth in the immediate future.
Despite these challenges, May showcased a favorable performance for U.S.-listed mining stocks. JPMorgan’s report highlights record first-quarter 2024 revenue and adjusted EBITDA for mining companies, even after excluding mark-to-market gains on HODL balances. These companies also increased their share of the network hashrate. The aggregate market capitalization of the 14 U.S.-listed miners monitored by JPMorgan surged by 19% sequentially to reach $18.4 billion, with Iris Energy leading the rally with nearly an 80% increase in shares.
In terms of Bitcoin‘s pricing dynamics, May witnessed an average price of approximately $65,200, marginally down from April, but with a seven-day rolling average at month-end showing an 8% increase to around $68,400. JPMorgan’s analysis indicates that Bitcoin’s annualized volatility in May remained consistent with the previous month, standing at 51%.
Regarding the network hashrate, a critical indicator of industry competition, May saw its first sequential decline since December 2022. The average network hashrate was recorded at 599 EH/s, reflecting a 4% decrease from April and a notable 50 EH/s decline from pre-halving levels. Additionally, the month-end seven-day moving average network hashrate dropped by 5% from April’s end, albeit showing a substantial 58% year-over-year increase.
Bitcoin mining profitability reached record lows in May, with miners earning an average of $49,000 per EH/s in daily block reward revenue. This is a stark contrast from the peak of $342,000 observed in November 2021. Transaction fees also experienced fluctuations, ranging from 3% to 10% of the block reward in May, slightly up from April’s figures.
Looking at the future outlook, the proved (remaining) block reward and the four-year block reward revenue opportunity both witnessed a 9% increase from April 30, reaching $87.9 billion and $43.8 billion, respectively, by May 31. The aggregate market capitalization of the 14 U.S.-listed miners amounted to 21% and 42% of the nominal value of the proved and four-year block reward opportunity, respectively, surpassing historical averages.
In conclusion, despite the challenges posed by declining hashrates and profitability, the Bitcoin mining sector exhibited resilience and positive momentum in May, fueled by robust performances of U.S.-listed mining stocks and favorable pricing dynamics.
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