Bitcoin Miners Struggle With Low Profits and Rising Operational Costs

Bitcoin miners are facing tough times as they encounter new challenges. Last Wednesday, mining difficulty surged dramatically, and Bitcoin's value dropped by $10,000 in one day.

This led to the hashprice—the earnings per unit of hashrate—falling to a record low, below $36 per PH/s. Although Bitcoin’s value has rebounded to over $60,000, the hashprice remains around $40 per PH/s, marking a 10% decrease from early July.

The seven-day moving average for hashrate has been declining since last week. Unless the upcoming difficulty adjustment provides some relief, miners may continue to struggle.

High operational costs are adding to the pressure. Bitmain’s Antminer S19XPs at Core Scientific’s facilities face a hosting rate of $0.0745 per kWh, making it hard to break even with a daily hashcost of $39 per PH/s. Major mining companies like Marathon, Core Scientific, and Riot are also facing profitability challenges at these hashprice levels, particularly after accounting for depreciation and taxes.

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In Q2 financial reports, these companies revealed high operational costs, pushing total mining expenses in July above $60,000 per Bitcoin. Despite this, Marathon and Riot are holding onto their mined Bitcoin, likely anticipating better future market conditions. They have raised over $1.5 billion this year through stock sales, aiming to survive the current slump. However, significant expenses loom in 2024, with over $1 billion already spent on power, plants, and equipment.

Conversely, Core Scientific is selling all the Bitcoin they mine to manage costs and reduce debt. They cleared $260 million of debt in July and are expanding into high-performance computing and AI with 382 MW of hosting capacity dedicated to CoreWeave.

Alexander Stefanov