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08/19/2024

Bitcoin Mining Costs Surge 168% Amid Capacity Expansion

BitFuFu expanded its mining capacity by more than 60% despite a significant spike in Bitcoin mining costs following the halving. BitFuFu, a cloud mining company affiliated with Bitmain, released its unaudited financial and operational report for Q2 2024, ending June 30. The report revealed a sharp increase in Bitcoin mining costs alongside growing mining capacity, with a "62.5% increase to 24.7 EH/s, compared to 15.2 EH/s in the same period of 2023."

Bitcoin Mining Costs Surge 168% Amid Capacity Expansion

BitFuFu expanded its mining capacity by more than 60% despite a significant spike in Bitcoin mining costs following the halving.

BitFuFu, a cloud mining company affiliated with Bitmain, released its unaudited financial and operational report for Q2 2024, ending June 30.

The report revealed a sharp increase in Bitcoin mining costs alongside growing mining capacity, with a "62.5% increase to 24.7 EH/s, compared to 15.2 EH/s in the same period of 2023."

Bitcoin Mining Costs Surge

According to BitFuFu's Q2 report, the most notable shift was the average cost to mine each BTC rising to $51,887. Compared to $19,344 per BTC in the same period of 2023, this increase can be attributed to higher electricity and operational costs.

The spike can also be tied to the BTC halving event in April 2024, when mining difficulty climbed while block rewards were cut by 50%.

Capacity Growth and Revenue

Despite the significant jump in BTC mining costs, BitFuFu continued to scale its mining operations.

With capacity rising to 24.7 EH/s, the BTC miner expanded its operational footprint by more than 60% even as mining costs increased.

The company also reported total revenue growing nearly 70%, reaching $129.4 million in Q2 2024, up from $76.3 million in the same period of 2023.

This revenue growth can largely be attributed to the expansion of the company's cloud mining services, which generated $77 million during the reporting period.

Analysts Remain Bullish

In an interview with CNBC on August 19, Matthew Sigel, head of digital assets research at VanEck, said that "the forced selling [has] passed."

Sigel described the current state of the crypto market and BTC price as "a typical seasonal pattern," characterized by "one to three months" following the halving.

The forced selling Sigel referenced included the German government's sale of 49,858 BTC for $2.6 billion while distributing repayments to Mt. Gox creditors.