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BTC $96,420 +2.34% ETH $3,280 +1.82% SOL $185.40 -0.92% BNB $642.50 +0.45% XRP $2.18 +3.12% DOGE $0.082 -1.50% ADA $1.05 +0.80% AVAX $42.10 +1.15%
08/22/2024

Bitcoin Mining Profits Drop as Halving and Rising Energy Costs Hit Margins — JPMorgan

Bitcoin miners are struggling to maintain profitability as April's Bitcoin network halving and rising energy costs weigh on mining output, according to a new report from JPMorgan. Q2 2024 "was a historic quarter, as Bitcoin miners had to adjust following Bitcoin's fourth halving event, which cut daily mined coins in half (and, all else equal, daily revenue opportunities), leading to compressed margins and profitability across the universe we cover," according to the report written by analysts Reginald Smith and Charles Pearce.

Bitcoin Mining Profits Drop as Halving and Rising Energy Costs Hit Margins — JPMorgan

Bitcoin miners are struggling to maintain profitability as April's Bitcoin network halving and rising energy costs weigh on mining output, according to a new report from JPMorgan.

Q2 2024 "was a historic quarter, as Bitcoin miners had to adjust following Bitcoin's fourth halving event, which cut daily mined coins in half (and, all else equal, daily revenue opportunities), leading to compressed margins and profitability across the universe we cover," according to the report written by analysts Reginald Smith and Charles Pearce.

Bitcoin miners have been struggling to adapt to the halving event on April 20, which cut the block reward from 6.25 BTC to 3.125 BTC per 210,000 blocks.

Energy costs and SG&A per Bitcoin mined. Source: JPMorgan

"Well-capitalized miners like [Riot Platforms] and [CleanSpark] acquired other miners with existing operational facilities to boost near-term hashrate capacity and expand their power supply," JPMorgan said. "Capital-constrained miners like IREN and [Cipher] focused on pursuing new opportunities that require less immediate capital."

Related: Hive Digital Sales Up 36% as Bitcoin Miner Pivots to AI

The five publicly listed Bitcoin mining companies tracked by JPMorgan mined a combined 5,854 Bitcoin in Q2, down 28% quarter-over-quarter. Marathon Digital Holdings held the top spot for BTC mined at 2,056 BTC, the report noted.

Meanwhile, CleanSpark gained market share after deploying $231 million in capital expenditures during Q2, capturing roughly 27% of total Q2 revenue among the tracked miners.

In total, the five miners raised approximately $1.2 billion in equity capital to keep pace with growing industry demands, according to the report.

Following the halving, some miners are reallocating compute power away from BTC mining toward artificial intelligence applications. Hive Digital Technologies Ltd. (HIVE) reported a 36% increase in sales in Q2 2024 after diversifying into AI compute services.

Others, such as Bitdeer Technologies Group, continue to double down on BTC mining with next-generation mining hardware.