Bitcoin mining stocks performed strongly in September, outpacing BTC against the trend, but miners' profitability is facing multiple challenges.

Despite a 3.2% fall in Bitcoin (BTC) prices in September, Bitcoin mining stocks showed remarkable resilience, rising against the trend. Companies like CIFR, WULF, IREN, BITF, and HIVE saw their stock prices soar, outpacing Bitcoin itself. However, behind these impressive stock performances, the mining economy is facing increasingly severe challenges, including a decline in computing power prices, a reduction in the proportion of transaction fees in block rewards, and an extended hardware recoup investment cycle.

Bitcoin mining stocks rise against the trend: September performance far exceeds BTC

As Bitcoin prices consolidate near the historical high of $124,500, Bitcoin mining stocks are showing an impressive recovery trend. According to data from The Miner Mag, Cipher's stock price has surged by 124%, Terawulf is up 95%, and IREN has skyrocketed by 86%, all reaching annual or historical highs. Their rise has even outpaced Bitcoin's 3.2% fall.

The strong performance of mining stocks comes at a challenging time. Currently, the next mining difficulty of the Bitcoin network is expected to increase by 4.1%, marking the network's entry into the Zetahash era. This is a milestone in Bitcoin's 15-year history, with the 14-day average Computing Power first breaking 1 ZH/s.

The mining economy is facing multiple pressures: Computing Power competition and profit compression

Beyond the eye-catching headlines, the economic situation of miners is showing signs of strain. As the competitive landscape rapidly evolves, network difficulty is expected to rise again by 4.1%, further consolidating the competitive intensity of the Zeta Hash era.

Meanwhile, the price of computing power has fallen to below 55 USD per PH/s. More critically, the proportion of transaction fees in the block reward is currently less than 0.8%, indicating that miners' profit margins are being squeezed.

However, unexpectedly, small operators are becoming the main drivers of growth. Bitdeer has expanded its Computing Power capacity by 40%, HIVE by 28%, and Cipher by 18%. Meanwhile, large mining companies have basically not made any new deployments. This shift in the “arms race” has also prompted hardware manufacturers such as Bitdeer and Bitmain to increasingly stockpile equipment themselves, transforming them from a single supplier into operators as well, in order to adapt to the rapidly changing market.

The Survival Path of Miners' Income After Halving

According to the weekly report from Hashrate Index (September 9 to 15), the Bitcoin network's Computing Power and difficulty remained stable. Despite a decrease in transaction fees, the price of Computing Power saw a slight rise.

During this week, miners received a total of approximately 3,344 BTC in Block Rewards, with a total value of about 382 million USD. Among them, transaction fees contributed only 29 BTC (approximately 3.3 million USD).

(Source: Glassnode)

By analyzing the Coinglass Bitcoin daily miner income chart, it is clear to see that the Bitcoin halving event in April 2024 led to a significant decline in miner income measured in BTC. However, due to the rise in Bitcoin prices offsetting the decrease in the amount of coins obtained, miner income measured in USD did not experience the same sharp decline. This proves that even if the amount of BTC miners receive decreases, the rise in Bitcoin prices can help them maintain profitability.

Conclusion

Against the backdrop of historic milestones and increasing miner activity, the Bitcoin ecosystem is demonstrating strong resilience. Despite signs that miners are transferring Bitcoin to CEX for short-term selling, many operators are stabilizing the market by holding or conducting over-the-counter (OTC) trades. Considering these trends, Bitcoin mining and the broader market dynamics remain robust. The counter-trend rise of mining stocks reflects the market's confidence that mining companies can still adapt and thrive amid extreme competition and technological challenges.