Bitcoin Mining Profitability Dropped 7.4% in March Amid Decline in Prices and Transaction Fees, According to Jefferies

Bitcoin mining firms faced a notable squeeze in profitability in March, with returns dropping 7.4% month-over-month, according to an analysis by investment bank Jefferies. The decline was primarily driven by a combination of weaker Bitcoin prices and a reduction in transaction fees, both of which significantly impact miners' revenue streams.

March saw a pullback in BTC prices from recent highs, which directly reduced the fiat-denominated rewards miners earn for validating blocks. Compounding the issue, network activity and on-chain demand dipped slightly, leading to a decrease in transaction volume and, consequently, lower transaction fees—a key secondary income source for miners beyond the fixed block reward.

This downturn in mining profitability comes at a sensitive time for the industry. Many miners are operating at tight margins ahead of the upcoming halving event, which will slash block rewards by 50%. With energy costs remaining high in several regions and mining difficulty near all-time highs, a drop in revenue places added stress on less-efficient mining operations.

The report underscores how sensitive the mining sector is to even moderate changes in network economics. As revenue streams compress, miners may be forced to shut down older, less efficient machines or shift operations to regions with cheaper energy to stay viable. Looking forward, firms with stronger balance sheets, access to low-cost power, and newer hardware are likely to weather the pressure better, while smaller players may face consolidation or exit the market altogether.