Bitcoin miner profits drop as halving, power costs weigh — JPMorgan

BTC miners are struggling to adapt to a post-halving environment.

Bitcoin miners are struggling to maintain profits as the Bitcoin network’s April halving and rising power costs weigh on miner production, according to a new JPMorgan report.

The second quarter of 2023 “was a historic quarter, as Bitcoin miners navigated the 4th Bitcoin halving event, which cut the number of daily coins mined (and all else equal, the daily revenue opportunity) in half, resulting in lower margins and profitability across our coverage universe,” according to the report, written by analysts Reginald Smith and Charles Pearce. 

Bitcoin miners have struggled to adapt to the Bitcoin network’s April 20 “halving” event, which reduced mining rewards from 6.25 BTC to 3.125 BTC per 210,000 blocks.

“Cash-rich miners like [Riot Platforms] and [Cleanspark] acquired other miners with turn-key facilities to increase near-term hashrate and increase their power pipeline,” JPMorgan said. ”Capital-constrained miners like IREN and [Cipher] focused on securing greenfield opportunities, which require less  immediate capital.”

Related: Hive Digital sales up 36% as Bitcoin miner forays into AI compute

The five publicly-traded Bitcoin miners JPMorgan covers mined 5,854 Bitcoin (BTC) in Q2, down 28% from the prior quarter. Marathon Digital Holdings maintained its lead in number of BTC mined, earning 2,056 BTC, the report said.

CleanSpark, meanwhile, gained market share after investing $231 million in capital expenditure in Q2. It earned around 27% of total Q2 revenues among covered miners, the report said. 

Collectively, the five miners issued some $1.2 billion in equity as they sought to keep pace with the industry’s rising demands, according to the report. 

Post-halving, some miners are reallocating computational power from BTC mining to artificial intelligence applications. Hive Digital Technologies Ltd. (HIVE) notched a 36% uptick in sales in the second quarter of 2024 after diversifying into servicing AI applications.

Others, such as Bitdeer Technologies Group, are doubling down on BTC mining with advanced mining equipment. 

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