Revenue for publicly traded Bitcoin (BTC) and other
cryptocurrency miners on Wall Street has fallen by 12%. This continues the
negative reaction to April’s halving, which reduced block rewards, coupled with
low network fees and rising production costs. According to the latest JPMorgan
report, this is making it difficult for miners to maintain profitability.
A few months ago, the fourth Bitcoin halving event took
place, reducing the rewards received by miners from 6.25 BTC to 3.125 BTC. As a
result, miners get half as much revenue for their work, and the competition
for mining new BTC has significantly intensified.
“The 4th Bitcoin halving event cut the number of daily
coins mined (and all else equal, the daily revenue opportunity) in half,
resulting in lower margins and profitability across our coverage
universe,” commented Reginald Smith and Charles Pearce in the JPMorgan
report.
The study’s authors also point out significantly higher
energy costs, which negatively impact the realized profitability of individual
publicly traded miners. For Marathon Digital (MARA), the largest Bitcoin
miner on Wall Street, these costs have already doubled in 2024 compared to
2023. The situation is similar for other publicly traded miners.
An example is BitFufu, whose mining
costs jumped by 168% over the year, resulting in a significant 75% cut in
net profit. On average, producing one Bitcoin cost the company $33,000.
Larger players are dealing with this problem by acquiring
smaller ones, leading to significant industry consolidation. We’ve seen at
least a few examples of such moves in recent months. One
of them was CleanSpark, which decided to acquire a Bitcoin mining site in
Wyoming.
“Cash-rich miners like Riot Platforms and Cleanspark
acquired other miners with turn-key facilities to increase near-term hashrate
and increase their power pipeline,” JPMorgan added.
Miners’ Earnings Down 12%
In a separate report prepared by VanEck, we read that BTC
miners’ total daily revenue fell by 12% month over month to $27.4 million.
Comparing this result with last year’s figures, it’s an almost 60% decrease.
Surprisingly, VanEck is generally positive and suggests not
paying too much attention to these values.
“While Bitcoin mining revenues have faced challenges
due to post-halving block reward reductions and low network fees, many publicly
traded Bitcoin miners are outperforming this year by capitalizing on
opportunities in AI and high-performance cloud computing,” VanEck explains
in its latest report.
Many publicly traded miners seek
their chances in the AI and HPC sectors, which can provide higher margins
per megawatt than traditional cryptocurrency mining.
“AI companies need energy, and bitcoin miners have it,” VanEck’s
head of digital assets research, Matthew Sigel, commented. “As the market
values the growing AI/HPC data center market, access to power—especially in the
near term—is commanding a premium.”
Bitcoin Miners are Shifting to AI & HPC, Unlocking New Revenue Through Strategic Arbitrage
We Estimate a $38B Net Present Value Opportunity by Converting 20% of their Collective Capacity by 2027.
(For context, the combined market cap of the stocks we looked at is $19B.)
— matthew sigel, recovering CFA (@matthew_sigel) August 16, 2024
Examples of such moves have been evident since last year.
For instance, HIVE Blockchain rebranded
to HIVE Digital to better reflect the evolving nature of its business.
VanEck also notes that the pace of BTC sell-offs by miners
is slowing, and transfer volumes from their treasuries to exchanges have fallen
by 21% over the month. This is said to signal “stabilization from miners
after their post-halving selling increased significantly in June and
July.”
Revenue for publicly traded Bitcoin (BTC) and other
cryptocurrency miners on Wall Street has fallen by 12%. This continues the
negative reaction to April’s halving, which reduced block rewards, coupled with
low network fees and rising production costs. According to the latest JPMorgan
report, this is making it difficult for miners to maintain profitability.
A few months ago, the fourth Bitcoin halving event took
place, reducing the rewards received by miners from 6.25 BTC to 3.125 BTC. As a
result, miners get half as much revenue for their work, and the competition
for mining new BTC has significantly intensified.
“The 4th Bitcoin halving event cut the number of daily
coins mined (and all else equal, the daily revenue opportunity) in half,
resulting in lower margins and profitability across our coverage
universe,” commented Reginald Smith and Charles Pearce in the JPMorgan
report.
The study’s authors also point out significantly higher
energy costs, which negatively impact the realized profitability of individual
publicly traded miners. For Marathon Digital (MARA), the largest Bitcoin
miner on Wall Street, these costs have already doubled in 2024 compared to
2023. The situation is similar for other publicly traded miners.
An example is BitFufu, whose mining
costs jumped by 168% over the year, resulting in a significant 75% cut in
net profit. On average, producing one Bitcoin cost the company $33,000.
Larger players are dealing with this problem by acquiring
smaller ones, leading to significant industry consolidation. We’ve seen at
least a few examples of such moves in recent months. One
of them was CleanSpark, which decided to acquire a Bitcoin mining site in
Wyoming.
“Cash-rich miners like Riot Platforms and Cleanspark
acquired other miners with turn-key facilities to increase near-term hashrate
and increase their power pipeline,” JPMorgan added.
Miners’ Earnings Down 12%
In a separate report prepared by VanEck, we read that BTC
miners’ total daily revenue fell by 12% month over month to $27.4 million.
Comparing this result with last year’s figures, it’s an almost 60% decrease.
Surprisingly, VanEck is generally positive and suggests not
paying too much attention to these values.
“While Bitcoin mining revenues have faced challenges
due to post-halving block reward reductions and low network fees, many publicly
traded Bitcoin miners are outperforming this year by capitalizing on
opportunities in AI and high-performance cloud computing,” VanEck explains
in its latest report.
Many publicly traded miners seek
their chances in the AI and HPC sectors, which can provide higher margins
per megawatt than traditional cryptocurrency mining.
“AI companies need energy, and bitcoin miners have it,” VanEck’s
head of digital assets research, Matthew Sigel, commented. “As the market
values the growing AI/HPC data center market, access to power—especially in the
near term—is commanding a premium.”
Bitcoin Miners are Shifting to AI & HPC, Unlocking New Revenue Through Strategic Arbitrage
We Estimate a $38B Net Present Value Opportunity by Converting 20% of their Collective Capacity by 2027.
(For context, the combined market cap of the stocks we looked at is $19B.)
— matthew sigel, recovering CFA (@matthew_sigel) August 16, 2024
Examples of such moves have been evident since last year.
For instance, HIVE Blockchain rebranded
to HIVE Digital to better reflect the evolving nature of its business.
VanEck also notes that the pace of BTC sell-offs by miners
is slowing, and transfer volumes from their treasuries to exchanges have fallen
by 21% over the month. This is said to signal “stabilization from miners
after their post-halving selling increased significantly in June and
July.”