Bitcoin miner profits decline as halving and rising power costs take a toll
Bitcoin miners are grappling with profitability as the April halving event and increasing power costs impact production, according to a new report from JPMorgan.
The second quarter of 2023 marked a significant period for BTC miners, as they navigated the fourth Bitcoin halving event, which reduced the number of daily coins mined by half. This halving led to decreased margins and profitability across the industry, according to the report authored by analysts Reginald Smith and Charles Pearce.
The halving, which took place on April 20, reduced mining rewards from 6.25 BTC to 3.125 BTC per 210,000 blocks, challenging miners to adapt to the reduced revenue opportunities.
The report highlights that cash-rich miners, like Riot Platforms and CleanSpark, responded by acquiring other miners with turn-key facilities to increase their near-term hashrate and expand their power pipeline. In contrast, capital-constrained miners such as IREN and Cipher focused on securing greenfield opportunities, which demand less immediate capital.
During the second quarter, the five publicly-traded Bitcoin miners covered by JPMorgan mined a total of 5,854 Bitcoin, a 28% decrease from the previous quarter. Marathon Digital Holdings led the group with 2,056 BTC mined.
CleanSpark, in particular, gained market share after investing $231 million in capital expenditures during Q2, capturing around 27% of the total revenues among the miners covered in the report.
In response to the post-halving environment, some miners are reallocating their computational power from BTC mining to artificial intelligence applications. For instance, Hive Digital Technologies Ltd. saw a 36% increase in sales in the second quarter of 2024 after diversifying into AI services. Meanwhile, Bitdeer Technologies Group is doubling down on Bitcoin mining by deploying advanced equipment.
