Challenges Faced by Bitcoin Miners Following Halving and Increased Energy Costs

Bitcoin miners are currently facing significant challenges in adapting to a post-halving landscape.

Current Market Conditions

A recent report from JPMorgan highlights that Bitcoin miners are struggling to retain profitability due to two main factors: the Bitcoin halving event in April and the rising costs of electricity. Analysts Reginald Smith and Charles Pearce described the second quarter of 2023 as pivotal for miners.

• The April 20 halving event reduced mining rewards from 6.25 BTC to 3.125 BTC per 210,000 blocks.
• This reduction led to decreased daily revenue opportunities, adversely affecting miners’ profit margins.

Strategic Adjustments by Miners

Different mining firms are adjusting their strategies in response to the new market conditions:

• Cash-rich miners: Companies like Riot Platforms and CleanSpark have been acquiring other miners to enhance their hashrate and energy capabilities.
• Capital-constrained miners: Players such as IREN and Cipher are focusing on opportunities that require less immediate financial investment.

In the second quarter, the five publicly traded miners covered by JPMorgan collectively mined 5,854 BTC, which is a 28% decrease compared to the previous quarter. Marathon Digital Holdings led with 2,056 BTC mined during this period.

Market Share and Competitiveness

CleanSpark has gained market share thanks to a capital expenditure of $231 million in Q2, which accounted for approximately 27% of total revenues among the miners analyzed.

In an effort to meet rising demands, these miners have collectively issued about $1.2 billion in equity. Some are even reallocating their computational resources from Bitcoin mining to artificial intelligence tasks. For instance, Hive Digital Technologies Ltd. saw a 36% revenue increase in Q2 2024 after expanding into AI applications.

Conversely, Bitdeer Technologies Group is focusing on Bitcoin mining growth by investing in advanced equipment.