Bitcoin miners profits grow 150% in two years, although they generate less BTC

Earnings from BTC miners.

Key facts:
  • Miners earn more than double what they did before the last halving.

  • The Bitcoin hashrate has continued to grow, despite bearish market waves.

Despite the automatic reductions in BTC issuance, Bitcoin miners today see a significant increase in their profits if they convert to USD. Miner revenues currently hover around $207,000 per exahash (EH) of power contributed to the network.

The emission of bitcoins is reduced by half every 210,000 blocks mined; a figure that is achieved every four years, approximately. This procedure, which occurs automatically in the Bitcoin network, is called halving.

The last Bitcoin halving occurred on May 11, 2020. At that time, the reward miners received for adding a new block of verified transactions to the blockchain was 12.5 BTC. After the halving, this incentive became 6.25 BTC.

Although just after the decrease in block rewards, miners also saw their profits decrease, at the end of 2020 the landscape began to change for these Bitcoin network workers.

The following graph shows the progression of the income of Bitcoin miners, according to their mining power contributed to the network, from 2018 to the present.

Earnings from BTC miners.
Highlighted here are Bitcoin miner earnings during the late 2018 sell-off, the 2020 halving, and today. Source: Glassnode.

It should be noted that during 2021 there were points in which the income of Bitcoin miners was even higher than the current one. As seen in the chart above, the earnings per exahash of power contributed to the Bitcoin network exceeded $400,000 several times.

Why are USD Bitcoin miners’ profits reaching this point?

There are a couple of reasons that have favored the profit of Bitcoin miners, despite the decrease in rewards on this network. The first one is the deflationary effect of the halving.

The fact that there is less availability of a resource makes it more valuable to those who own it than to those who wish to have it. Therefore, as less BTC is issued, its supply is reduced and its market price is favored (in theory). However, it is important to note that there are many factors that affect the price of an asset in the market, not just its scarcity.

In this order of ideas comes another aspect that influences the earnings of Bitcoin miners to look so bulky today: the price of BTC in the market. In the graph above you can see a correlation between the income of the miners (in orange) and the oscillations of the price of bitcoin in the cryptoactive market (gray line); while, in the graph below, the price of BTC when the most recent halving occurred is observed. Since then, its value is almost five times higher.

Bitcoin price.
A bitcoin went from costing around USD 8,800 to around USD 40,000 between the date of the last halving and today. Source: CoinMarketCap.

Bitcoin miners’ profits are higher despite the adversities

Bitcoin miners are favored by the rise of BTC in the market compared to the prices of two years ago, as well as the development of more powerful and efficient devices for mining. However, there are factors that work against them, such as the increase in the difficulty of mining and the bearish waves of the cryptocurrency market.

As of today, although the price of BTC is five times higher than two years ago, it is down, as reported recently by CriptoNoticias. In the last week, the average price of bitcoin fell from $46,000 to $40,000equivalent to 15%.

Added to the red trends of the current cryptocurrency market is the increase in the difficulty of mining. The difficulty of mining in Bitcoin increases as the hashrate of the network increases. This in order to balance the speed of production of blocks in the chain. Currently, the Bitcoin mining difficulty is 28.5 Tera, a record figure reached by this network thanks to the 200 EH/s that its hashrate has been averaging.

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