Bitcoin mining revenue is at record levels according to Diar, with the first six months of 2018 exceeding all of 2017 due to increased Bitcoin prices. Through September 2018, there has been USD 1.4 billion more profits in 2018 than 2017, and there’s still a quarter of the year to go. However, rising hash rate combined with decreasing Bitcoin price throughout 2018 has caused profit margins for Bitcoin miners to decline drastically.

Bitcoin mining revenue is the same between 2017 and 2018 of course but on average, prices were higher in 2018, with prices ranging from USD 17,000 to USD 6,000 during 2018, while during the first nine months of 2017, prices were below USD 5,000. Miners have mined USD 4.7 billion of Bitcoin during 2017 so far, with more than USD 1 billion of profits during January 2018 alone when Bitcoin prices were highest.

Despite record Bitcoin mining revenue in terms of USD, hash rate has been continually increasing. Bitcoin mining difficulty has risen from 2 trillion to 7.5 trillion during 2018, as hash rate has increased from 13.8 Exahash/s to 53.4 Exahash/s. This means that Bitcoin mining has become 275% more difficult during 2018, while Bitcoin prices have simultaneously declined more than 60%.

This is a double whammy for Bitcoin miners, since Bitcoin miners have to buy more rigs to keep up, costing them more electricity, and there’s been generally less revenue month over month due to Bitcoin’s price decline. The popular S9 Antminer from Bitmain had an 86% profit margin in January 2018 if power costs USD 0.10 per KWh, and this has declined to practically 0% profit by September 2018. This means that all Bitcoin mining rigs less profitable than the S9 Antminer cost more electricity than the revenue they earn and are probably shut off at this point, and S9 Antminers might be unprofitable depending on local electricity costs.

This highlights a general trend that is occurring, where personal miners are being pushed out of the Bitcoin mining game. Large mining firms like Bitmain are building supersites that have tremendous amounts of mining power in one location, and are able to position their supersite in a location with cheaper electricity, and buy or build the rigs at prices below wholesale. Diar estimates that big mining operations are still making 50-60% profit, and this will drive a continued increase in Bitcoin’s network hash rate.

However, for personal miners, who often pay USD 0.10 per KWh or more for electricity and retail cost for rigs, Bitcoin mining is quickly becoming unprofitable. This represents a paradigm shift in the Bitcoin mining industry, from being a business anyone could profitable partake in with proper equipment, to being profitable only for massive mining companies.


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