JPMorgan Reflects on Recent Crypto Mining Trends

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Smith estimates that Bitcoin miners made a slightly higher profit in March compared to February as the cryptocurrency’s price surge outstripped global hash rate growth.

On the other hand, overall bitcoin mining profitability measured by daily block reward revenue per EH/s is down 46% from the record high it touched in November as a result of a significant jump in global hash rate and a drop in Bitcoin price.

Several publicly-traded miners are generating record revenues as a result of their own hash rate growth outshining the broader market, Smith said.

The price of the world’s largest cryptocurrency has recovered in March, averaging $41,800 during the month, 3% higher than in February.

Bitcoins’ 7-day rolling average price as of March 31 is almost in line with the price at the start of the year, though it remains down roughly 32% from its November peak. The cryptocurrency’s realized daily annualized volatility plunged to 62% in March from 80% in February.

Smith noted the surge in the network hash rate in March as more mining equipment is deployed around the world. The analyst explained that a growing network hash rate bodes well for network security, however, it weighs on miner profitability as it makes the process of solving a block more difficult.

“We estimate the average network hashrate increased 1.6% to 201.0EH/s in March. We note the monthly average network hashrate has increased 47% and 16% over the past six and three months, respectively. The rate of increases seems to be abating in recent weeks, which makes sense given rising miner hardware costs and fairly stagnant bitcoin prices,” Smith said.

The best-performing mining stock in march was Riot Blockchain (NASDAQ:RIOT), surging 23%, while Stronghold Digital was the worst performer, down 54%.