Bitcoin Mining Profitability Hits Critical Low

As the price of Bitcoin fell below $50,000, the hashprice plummeted to a record low of $36 per PH/s per day, according to BlocksBridge Consulting.

? Record Low Profits Push Miners to the Brink

Tough times as #bitcoin mining costs topped $60k in July.

Read more in #MinerWeekly for details and estimated $MARA, $RIOT, and $CORZ hashcosts in Q2:https://t.co/tHarpstOiL

— BlocksBridge Consulting (@BlocksBridge_) August 8, 2024

Even after the cryptocurrency’s price recovery, the figure remains slightly above $40 per PH/s, still below the previous low recorded in early July.

Analysts noted that during the last adjustment, mining difficulty reached a historic high of 90.67 T. As the seven-day moving average of Bitcoin’s hash rate has been declining since then, experts predict a potential decrease in difficulty at the next adjustment.

Under current conditions, mining remains a “challenging environment,” especially for those without access to competitive electricity prices, they emphasized.

BlocksBridge cited the example of Bitmain’s Antminer S19XP installations with a hash rate of 4.1 EH/s at Core Scientific facilities. The hosting fee is $0.0745/kWh, implying a hashprice of $39 per PH/s per day, roughly at the breakeven point of $40 per PH/s.

According to analysts, even self-mining under current conditions is unlikely to yield net profits before depreciation and taxes. Financial reports from three of the four largest public companies in the sector — MARA (Marathon Digital), Core Scientific, and Riot — show that their cost of mining digital gold exceeded $60,000 per coin in July.

MARA and Riot have shifted to a strategy of accumulating Bitcoin reserves, including purchasing the cryptocurrency. Core sells 100% of mined coins to cover operational expenses.

Both strategies have their advantages, analysts believe. The first two companies can ignore short-term cryptocurrency price movements, banking on future growth. Since the beginning of the year, they have collectively raised over $1.5 billion through stock offerings. However, their capital expenditures during this period exceeded $1 billion.

Core likely does not achieve net profit from Bitcoin sales, but the revenue allows it to fund operations and reduce debt, BlocksBridge experts highlighted. Additionally, the firm is actively expanding its capabilities in HPC and artificial intelligence under a $3.5 billion contract with CoreWeave.

In July, Bernstein analysts noted that miners are attractive partners for building AI data centers due to their access to power sources and operational capabilities.