Bitcoin miners are facing significant challenges in maintaining profitability following the recent halving event that occurred on April 20, 2023. A report from JPMorgan highlights the struggles miners are experiencing due to reduced mining rewards and increasing energy costs.
The latest halving event cut the daily mining rewards from 6.25 BTC to 3.125 BTC for every 210,000 blocks mined. This dramatic reduction has led to a 28% decline in Bitcoin production among the five publicly traded miners covered in the report, with a total of 5,854 BTC mined in the second quarter of 2023. Marathon Digital Holdings led the pack, producing 2,056 BTC, while CleanSpark capitalized on its capital expenditures of $231 million to gain market share, accounting for approximately 27% of the total revenue among the covered miners.
As miners grapple with these changes, those with substantial cash reserves, like Riot Platforms and CleanSpark, are acquiring other mining operations to boost their hashrate and secure better energy resources. Conversely, capital-constrained miners, such as IREN and Cipher, are focusing on securing new opportunities that require less immediate investment.
The report also notes a shift in strategy among some miners, who are reallocating their computational resources from Bitcoin mining to artificial intelligence applications. For instance, Hive Digital Technologies reported a 36% increase in sales in the second quarter of 2024 after diversifying into AI services. Meanwhile, companies like Bitdeer Technologies Group are doubling down on Bitcoin mining by investing in advanced mining equipment.
Collectively, the five miners have raised around $1.2 billion in equity to navigate the industry’s rising operational demands. As the market adjusts to the new post-halving landscape, the future profitability of Bitcoin mining remains uncertain, with many firms exploring various strategies to adapt to the evolving conditions.
