Cryptomining Summary: Bitcoin Production Falls in September, Hash Rate Rises

Cryptocurrency miners saw a modest decline in the number of bitcoins (BTC-USD) mined in September vs. August, as an increase in the network’s hashrate and difficulty screamed trouble for profit margins.

The so-called difficulty of mining is a closely monitored calculation in the crypto ecosystem. It measures how difficult it is to mine a bitcoin (BTC-USD) block based on the amount of participants and computing power (hashing power) used to mine and secure the blockchain. A high difficulty level (as a result of high hash power), as is the case now, tends to lower the miners’ profitability. The difficulty is currently sitting around record highs of 31.36 trillion versus 30.97 trillion a month ago, according to data from blockchain.com.

The Bitcoin (BTC-USD) network’s hash rate, which measures how much computing power is used to process transactions on the blockchain, stands at an all-time high of nearly 255 exahashes per second, in a move that underscores margin compression in the mining industry, according to blockchain. com data. This is up from 225 EH/sa the month before.

Despite a backdrop of a higher network hash rate and difficulties along with suppressed bitcoin (BTC-USD) prices, miners’ earnings have increased in September, rising to $22.4 million at the end of the month from $16.6 million at the beginning of the month , according to blockchain.com data. Nevertheless, it is down from 40.9 million dollars in the same period the previous year.

Overall, crypto miners’ bitcoin (BTC-USD) output fell by 1.1% on average, while the hashrate jumped 10.6%, according to the table below. Some companies cited a shorter month as one of the main problems in lower BTC production.

Looking at miners individually, Marathon Digital (MARA), CleanSpark (CLSK) and Iris Energy (IREN) were the only ones to produce more BTC than last month. Note that the following miners have yet to report their September numbers: Hive Blockchain (HIVE), BitNile (NILE), Argo Blockchain (ARBK), and Greenidge Generation (GREE).

Furthermore, most miners continued to sell their bitcoin (BTC-USD) holdings as capital dried up amid soaring power prices, shrinking profit margins. During the month, Bitfarms (BITF) sold 544 BTC, Riot (RIOT) sold 300 BTC, CleanSpark (CLSK) sold 380 BTC, and Core Scientific (CORZ) sold 1,576 BTC.

For Bitfarms (BITF), in particular, SA contributor Gary Bourgeault believes the company’s 10% drop in BTC production “may have been an anomaly.”

“The key for BITF through the rest of 2022 and into early 2023 will be the CPI release,” he added. “If things turn out to be better, high-growth assets will attract more investment and BITF will benefit from that.”

Take a look at the chart here to see how miner stocks have fared in September compared to bitcoin (BTC-USD).

Earlier last week, (October 6) Grayscale launched a new entity to invest in bitcoin mining hardware in the wake of discounted prices.