Bitcoin Mining Faces Challenges Amid Rising Competition and Declining Revenue

According to Cointelegraph, the Bitcoin mining industry is experiencing increased pressure due to heightened network competition and declining revenue conditions. The network's hashrate, which measures the total computing power securing the Bitcoin network, reached a record 1.16 ZH/s in October. This surge in competition comes as Bitcoin's price fell toward $81,000 entering November, as reported by The Miner Mag. The hashprice, which indicates miner revenue per unit of computing power, dropped below $35 per hash, falling under the $45/PH/s median total hashprice reported by public mining companies. This decline is pushing several operators close to breakeven levels. The report highlights that payback periods for mining rigs have extended beyond 1,200 days, while financing costs continue to rise, adding further strain to the sector. The downturn follows a relatively stable third quarter, during which the hashprice averaged about $55/PH/s, driven by Bitcoin trading near $110,000. However, the increased competition on the network and the drop in Bitcoin's price entering November have pushed mining profitability to its weakest levels on record. This financial strain has coincided with a surge in miner borrowing, initially driven by a wave of near-zero-coupon convertible bonds in the past quarter. While miners are accelerating their shift into AI and high-power computing (HPC), the revenue from these services remains insufficient to offset the sharp decline in Bitcoin mining income, according to the report. Despite the sector's tightening economics, the top ten publicly traded miners saw gains over the past 24 hours, with CleanSpark, Cipher Mining, and IREN posting double-digit increases on Monday. This surge followed a JPMorgan research note raising price targets for these miners, citing a rise in long-term HPC and cloud deals across the sector. JPMorgan noted that Cipher's share price had fallen roughly 45% from its peak, creating a more attractive entry point, and stated that the company was "well-positioned" to sign additional deals with HPC tenants. In November, IREN signed a five-year, $9.7 billion GPU cloud services deal with Microsoft, providing the tech giant access to Nvidia GB300 GPUs hosted in IREN's data centers. The bank adjusted its estimates for Marathon Digital and Riot, arguing that lower Bitcoin prices and larger share counts are impacting the two miners' sizable coin inventories. The surge in miner stocks also coincided with a mild rebound in Bitcoin's price, which rose around 2% over the past 24 hours, trading at approximately $89,000, according to CoinGecko data at the time of writing.