The Bitcoin mining industry is facing some tough times, with the average cost to produce a BTC reaching $96,100 for publicly traded miners when including non-cash costs such as depreciation and stock-based compensation, according to a report by CoinShares analyst James Butterfill.
As the data shows, average cash costs rose to $49,500 per BTC in Q2, 2024, up from $47,200 in Q1, and there's no stopping it. The reason is that mining conditions are becoming more complex and capital intensive.
Dan BurginAccording to reports, miners are still expanding their infrastructure despite high production costs and increasing difficulty. They are hoping that the Bitcoin price will rise to support future profitability.
However, there are still some operational challenges as for example it is hard to get credit at a good rate right now, especially after things like the FTX collapse. And high interest rates are not helping.
Yuri MolchanAs a result, many miners have started issuing shares to fund their operations, which has led to dilution of ownership. While the Bitcoin price and miners' stock prices have been more closely correlated lately, miners did not benefit from the price gains earlier in the year that were tied to the performance of spot Bitcoin ETF in the U.S.
Top mining companies are also looking for new ways to manage rising costs. They are exploring options such as fixed-rate power contracts, high-density setups and artificial intelligence.
As the industry braces for another halving, BTC miners are under pressure to improve cost efficiency and find alternative revenue streams to stay profitable.
Alex Dovbnya
Arman Shirinyan
Dan Burgin