In March 2024, the Bitcoin mining sector experienced significant growth, driven by the surge in cryptocurrency prices to all-time highs, leading to an increase in mining profitability, as outlined in a JPMorgan report.

The analysis comes at a critical juncture as the industry prepares for the upcoming Bitcoin halving event scheduled for April 16, 2024, which is anticipated to impact miners’ rewards and overall profitability.

Bitcoin’s price surged to an average of nearly $67,600 in March, reaching its highest historical level, and closed the month with a seven-day rolling average price of around $69,900. This rise in price represents a 25% increase from the previous month, with the annualized volatility rising to 65% in March from 42% in February.

During March, the network’s average daily hashrate, which measures the computational power utilized for mining and processing transactions, hit a new milestone of 600 EH/s (exahash per second). This figure indicates a 4% rise from February and an impressive 80% year-over-year growth. The uptick in hashrate signifies not only heightened competition among miners but also reflects the industry’s resilience and positive outlook, as highlighted in the report.

Despite these encouraging trends, the impending Bitcoin halving event, where the block reward will reduce from 6.25 to 3.125 bitcoins, introduces uncertainty regarding future mining profitability. The JPMorgan report suggests that the halving could potentially lead to a decline in profitability in April unless offset by a substantial rally in Bitcoin’s price or a significant decrease in the network’s hashrate.

In March, the estimated average daily block reward revenue per exahash for miners reached $100,400, marking the highest level since August 2022 and representing a 33% sequential increase. This surge in profitability was attributed to the appreciation in Bitcoin’s price outpacing the growth rate of the network’s hashrate.

The report also delved into the performance of U.S.-listed Bitcoin mining firms, noting that the aggregate market capitalization of the 14 tracked miners rose by 3% month-over-month to $20 billion. According to JPMorgan’s calculations, this figure represents 42% of the four-year revenue opportunity.

Among the listed companies, Cipher Mining Inc (NASDAQ:CIFR) emerged as the top performer with a 74% increase, while Bitfarms Ltd (NASDAQ:BITF) experienced a decline of 22%, making it the least favorable stock of the month.