Reportedly, analysts from Cantor Fitzgerald have identified that eleven of the major publicly traded Bitcoin (BTC) miners, including prominent names like Marathon Digital, Riot Platforms, and Core Scientific, could face challenges in mining Bitcoin profitably if the BTC price does not experience a significant increase post-halving. The findings, referenced in a January 25 post on X by CleanSpark executive chairman Matthew Shultz, suggest that the rewards these Bitcoin miners receive from their operations may not be sufficient to offset the associated costs. As a result, these miners may encounter increased financial pressure following the Bitcoin halving. The price of BTC is currently down $40,133.
It’s important to acknowledge that Bitcoin miners’ revenues are intricately tied to the fluctuation in Bitcoin prices. An executive from Luxor highlights that miners frequently adopt strategies to mitigate potential losses resulting from the volatility in Bitcoin prices.
Among the Bitcoin miners examined, UK-based Argo Blockchain (ARBK) and Florida-based Hut 8 Mining were identified as potentially facing challenges in profitability after the halving, given the current Bitcoin price. Their “all in” cost-per-coin rates were reported as $62,276 and $60,360, respectively.
In its most recent update on mining operations dated January 5, Hut 8 disclosed total reserves of 9,195 BTC, valued at $377 million based on current prices.
Cantor analysts projected that, assuming an average Bitcoin price of $40,000 and no significant changes in hash rate, the only firms expected to sustain profitability after the halving were Singapore-based Bitdeer and US-based CleanSpark.
The metric used by Cantor, “all in per coin,” encompasses the overall expenses incurred by a Bitcoin miner in producing a single Bitcoin, encompassing electricity costs, hosting fees, and other cash-related expenses.
The upcoming Bitcoin halving, scheduled for April, involves a reduction in mining rewards by half for Bitcoin miners. While many experts view this supply reduction as a positive factor for Bitcoin’s long-term price, it poses a challenge for miners with high operational costs. This challenge is compounded if the Bitcoin price does not rise sufficiently to cover these costs.
Several market analysts predict a significant increase in Bitcoin prices in the months following the halving. Dan Rosen, the associate director of derivatives at Bitcoin miner Luxor, notes that miners often employ various strategies to hedge their exposure to BTC, such as acquiring derivatives products like hash rate futures contracts and BTC-related options to mitigate potential volatility.
Despite attempts to contact several Bitcoin miners mentioned in the report, Cointelegraph did not receive an immediate response.