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Bitcoin mining experienced a massive drop in revenue in June compared to the previous month. A recent report revealed that revenue in the sector decreased by almost a quarter compared to last May’s revenue.
Bitcoin miners raked in $281 million in revenue in June, according to a CoinDesk report. The publication also added that the estimate, which is based on data from Coin Metrics, is a three-month low in Bitcoin revenue.
June’s revenue also represents a massive decline compared to the previous month. For comparison, Bitcoin miners generated $366 million in May which means that June’s $281 million is 23 percent lower than the month-ago level.
There are two reasons for the massive drop in revenue, according to CoinDesk. The decline is caused by lower network fees and the reduced mining reward after May’s halving.
Bitcoin halving is a preprogrammed event that happens around every four years where block reward is reduced by half. When the token was launched in 2009, the mining reward is 50 BTC but it became 20 BTC after the first halving event in November 2012, according to IG.com. The second halving occurred in July 2016 where mining reward was further reduced to 12.5 BTC.
The third having, which is also the most recent one, happened in May this year. From 12.5 BTC, the new mining reward was reduced to 6.25 BTC. As expected, the reduction also resulted in a decrease in revenue among Bitcoin mining firms.
Network fees also decline in June contributing to the overall decline in revenue for mining companies. Data from Coin Metrics reveal that miners also collected $12 million in June.
June’s $12 million in fees account for only 4.3 percent of total revenue. This is a massive decrease in May where fees account for 8.3 percent of the total, which is a 12-month high.
The decrease in revenue due to the halving event has long been anticipated by Bitcoin miners. To offset the decline in mining reward, some mining firms have opted to upgrade their hardware to improve their operational efficiency.
For instance, Riot Blockchain, choose to tackle the challenge head-on by upgrading its mining fleet. The firm, one of the few US-based crypto mining companies listed in Nasdaq, recently bought 1,000 Bitmain S19 Pro Antminers to ramp up its aggregate hash rate by more than 400 percent.
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