Merged optimism: the mining industry at $100,000

In early November bitcoin’s mining difficulty rose by 1.59% to a record 103.9 T. Meanwhile, the price consolidated above $90,000 and, overnight on December 4–5, broke through the all-time level of $100,000.

Together with the team at mining pool ViaBTC, we review the state of the mining industry at the end of 2024.

Bitcoin mining

According to JPMorgan, bitcoin mining profitability — the hashprice — rose by 29% in the first half of November. Analysts attribute the improved mining economics to two main factors:

• a rise in the bitcoin price that outpaced hashrate growth;
• a higher share of transaction fees.

According to The Block researcher known as Lars, miners’ total revenue rose by 18.6% in November to $1.21bn.

3/12 BTC miner revenue increased by 18.6% to $1.21B, while ETH staker revenue increased by 18.8% to $263M: pic.twitter.com/JnwVdZA2Mx

— Lars (@lars0x) December 2, 2024

Representatives of ViaBTC stress that mining income depends on specific hardware and the cost of electricity:

“In any calculations you should primarily focus on the devices used to mine bitcoin. As an example, let us take a Whatsminer M50 at 120 TH and an “outlet” price of $0.055 per kWh. As of November 21, mining on ViaBTC this combination will bring in about 0.0000732 BTC and 0.00738960 FB per day. That is $7.14 at a bitcoin rate of $97,000. Taking into account expenses of $4.62 we get a net profit of $2.52 per day or $76.8 per month.”

The pool’s team notes these are ballpark figures that ignore bitcoin’s price volatility and its steadily rising difficulty as more machines come online; a further jump in hashrate is likely. At the end of November, US customs officials held up shipments of hundreds of Antminer S21 and T21 ASICs, and some Bitmain miners had already spent two months in port warehouses.

“We believe the US Customs Service will ultimately approve the import of the equipment and it will be connected to the network very quickly, given Donald Trump’s plans to build a ‘mining superpower’. Therefore, one should expect only rising difficulty in the future,” ViaBTC asserts.

Earlier, Trump said he intended to mine “the remaining bitcoins in the United States,” arguing it would help “dominate in energy.” At the same time, ViaBTC analysts note a diminishing impact of miners’ sales on the bitcoin price.

“Miners produce fewer than 500 BTC per day, while daily trading volume is around 900,000 BTC. There is, of course, a small effect, but it certainly cannot be called significant, since more than 94% of coins have already been mined. MicroStrategy alone holds 402 100 BTC, equivalent to two years of work for all miners,” ViaBTC representatives comment.

In their view, the price is now more influenced by large funds, investors and countries such as El Salvador. Since November 17, 2022, the latter has been buying 1 BTC every day under a DCA strategy.

Altcoin mining

Mining bitcoin is the conservative investor’s choice, but several other PoW cryptocurrencies have also come a long way with miners and have historically delivered steady returns.

“Special mention should go to the ‘king’ of altcoin algorithms, Scrypt. Devices that support it can mine several coins via merged mining. For example, the Antminer L7 has shown one of the best revenue metrics for three years on a commercial rate of $0.055/kWh,” ViaBTC representatives comment.

The L-series was initially positioned as hardware for Litecoin (LTC) with Dogecoin (DOGE) as a bonus coin under merged mining. Since 2021, however, the first meme coin has brought miners the bulk of profits as Elon Musk has promoted it actively. In August 2024, ViaBTC added Bellscoin (BEL) support alongside Litecoin/Dogecoin mining.

“As of November 21, 2024, mining on an Antminer L7 will yield about 0.0243 LTC, 89.36 DOGE and 0.1469 BEL. That is $37.32. After deducting costs of $4.62 we get a net profit of $32.7 per day or $997.35 USD. Very solid compared with our bitcoin calculations. But you must also factor in the sevenfold difference in device prices: $1,150 for a Whatsminer M50 and $8,000 for an Antminer L7,” ViaBTC representatives comment.

From time to time, machines appear with even more enticing headline returns, especially on relatively new algorithms in projects such as Kaspa (KAS) and Alephium (ALPH).

“But in such cases all paper profitability estimates should be divided by three, if not five, because each new batch of hardware instantly sends difficulty soaring,” ViaBTC notes.

Conclusions

In 2024 bitcoin’s mining difficulty has kept setting records alongside its price. This trend will likely persist in the near term, given the victory of the first “crypto president” in the US election.

Amid a decline in bitcoin dominance from a peak above 60%, many miners are turning their attention to other PoW cryptocurrencies such as Dogecoin. After Trump’s win it returned to the spotlight thanks to Elon Musk. In late November, Bloomberg’s Eric Balchunas floated the possibility of a Dogecoin ETF.

According to ViaBTC, Dogecoin and other PoW coins such as Kaspa could offer miners higher returns than bitcoin if an altseason begins in 2025.