U.S. Bitcoin Miners Dominate 29% of Global Hashrate in February: JPMorgan Report

What to Know

• U.S.-listed Bitcoin mining firms now account for 29% of the global hashrate, almost twice as much as a year ago.
• The Bitcoin network hashrate increased 6% in February, intensifying mining competition.
• Mining profitability fell by 13% from the end of January due to rising hashrates and a declining Bitcoin price.

U.S. Bitcoin Miners Expand Dominance

According to JPMorgan’s latest report, U.S.-listed Bitcoin miners have significantly expanded their market share, now representing 29% of the global Bitcoin network hashrate. This marks a 95% year-over-year (Y/Y) growth, showcasing the increasing dominance of American mining firms.

JPMorgan analysts Reginald Smith and Charles Pearce highlighted that while the global network hashrate increased 45% in the past year, the hashrate of U.S.-listed companies surged at more than twice that rate. The combined total for 14 publicly traded Bitcoin mining companies reached 244 exahashes per second (EH/s), demonstrating rapid growth in the sector.

Rising Hashrate Pressures Mining Economics

The Bitcoin network hashrate measures the total computational power used to mine Bitcoin and secure the network. A rising hashrate generally means greater competition among miners, leading to higher mining difficulty. In February, the hashrate increased by 6%, making it harder for miners to generate block rewards.

At the same time, Bitcoin’s average price fell slightly from January, reducing mining revenues. According to JPMorgan, the hashprice, which is a measure of daily mining profitability, dropped 13% from the end of January due to these factors. Lower rewards combined with increased competition put additional pressure on mining operations, particularly those with higher energy costs.

Mining Rewards and Stock Performance

JPMorgan estimated that Bitcoin miners earned an average of $53,600 in daily block rewards in February, a 6% decline from the previous month. The total market capitalization of Bitcoin mining stocks tracked by JPMorgan fell by 1%, reflecting the economic pressures on the industry.

Despite these challenges, some mining stocks outperformed others. Iris Energy (IREN) saw a 27% gain in the first half of February, leading the sector. Meanwhile, Greenidge Generation (GREE) underperformed, with a 20% drop in share value. These fluctuations indicate that investors are carefully watching miners’ efficiency and profitability in an increasingly competitive market.

U.S. Mining Stocks Gain Network Share

A separate report from Bernstein on Monday echoed JPMorgan’s findings, noting that U.S.-based Bitcoin miners are steadily increasing their share of the global hashrate. This trend is likely to continue as American firms leverage advanced mining technology, more efficient energy sourcing strategies, and increasing institutional investment in mining operations.

The Future of Bitcoin Mining in the U.S.

As Bitcoin’s mining difficulty rises and the next halving event approaches (expected in April 2024), the industry faces a new set of challenges and opportunities. The halving will cut mining rewards in half, making efficiency and cost management even more crucial for miners.

Additionally, U.S. regulatory scrutiny on cryptocurrency mining could impact growth. While some lawmakers push for stricter energy regulations, others advocate for pro-crypto policies to keep mining operations within U.S. borders. The outcome of these debates could significantly shape the future of the industry.

Bottom Line

U.S.-listed Bitcoin miners have nearly doubled their share of the global hashrate in a year, now controlling 29% of Bitcoin’s mining power. However, with increasing competition, rising difficulty, and declining profitability, the sector faces both opportunities and risks. As the Bitcoin network continues to evolve, miners will need to adapt to shifting market conditions, optimize efficiency, and prepare for future halving events to remain competitive.