Report Shows Bitcoin Mining Firms May Be Seeing Record Revenues But Low Profits

Research published by Diar shows that revenue generated through Bitcoin mining in the first six months of this year has overtaken revenue from 2017.


Research published by Diar shows that revenue generated through Bitcoin mining in the first six months of this year has overtaken revenue from 2017.

Left: Profit Estimates Using S9 Miners & $0.1/kWh, No Pool Fees or Hardware Costs. The chart illustrates profits if all miners paid retail electricity prices. Right: Daily Electricity Cost on S9 Miners & $0.1/kWh, No Pool Fees or Hardware Costs calculated. USD Average Monthly revenues only Coinbase reward.

Miners achieve record revenues this year

Researchers at Diar found that with Bitcoin up 40 percent in the last 12 months, miners have been able to achieve record revenues this year.

In the first six months of the year, mining revenue reached $4.7 billion, which is $1.4 billion higher than the entirety of 2017, the research pointed out.

Numerous factors, such as increased competition and computing power requirements have combined to play a role in making Bitcoin mining less profitable for companies than it was a year ago.

The report highlighted China as one of the few countries which offer retail energy price packages, making the country one of the best places to set up mining operations, with energy costs of just around $0.08/kWH.

Diar further pointed out that even though the electricity is cheap, there are other factors, such as rent, salaries, equipment, and other overhead costs which have affected small mining operations negatively and have caused some of them to shut down.

All these combined have made the mining industry a favorable one for the big mining pools such as those owned by mining giant Bitmain.

Diar pointed out that the mining strategy of Bitmain is directly connected to its sales strategy for its mining units.

The report further added that Bitmain’s existing 11 mining facilities in China and the three soon to be launched in the U.S. will see the company position itself as a massive producer which would control a large portion of the Bitcoin hashrate.

Bitmain is interested in ensuring that miners make money so that the company can continue to sell them more mining hardware. Diar showed that 95 percent of their Bitmain’s revenue so far this year has come from the sale of their equipment.

Bitmain’s mining pools also still remain profitable which is crucial for the company’s new operations in the U.S., which are expected to be more expensive to run than those in China.

The market has more room for growth

Diar concluded that the mining market still has room for growth. The report stated that the recent petering out of hashing power would not last for long.

Big mining operations currently enjoy low electricity at anywhere between 50-60 percent gross profit from Bitcoin revenues. This means that there is still enough room for growth and profits to squeeze.

In the meantime, and probably the near future, Bitcoin mining is best for bigger players with more funds.

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