As a seasoned crypto investor with years of experience under my belt, I’ve seen the ups and downs of this wild ride we call the cryptocurrency market. The recent report by CoinShares on Bitcoin miners and their cost-cutting measures is an interesting development.
CoinShares reports that due to the effects of Bitcoin’s (BTC) April halving, miners are adopting artificial intelligence and reducing expenses in order to navigate through the industry challenges.
Due to the rising costs and challenges associated with mining Bitcoin, as per CoinShares’ Q3 mining report, the results experienced by Bitcoin miners have become quite diverse.
As a researcher, I’ve observed that this year, the Bitcoin mining sector has encountered substantial hurdles. Specifically, the revenues and hash rates have seen a downward trend according to my findings from CoinShares.
“Despite this, miners have continued to roll out new infrastructure and have committed to further expansion, anticipating future price increases.”
In simple terms, the Bitcoin network undergoes a process called halving every four years, which reduces the amount of Bitcoin awarded for mining each block by half.
The reduction in mining rewards during the April event lowered the amount earned per block from 6.25 Bitcoins to 3.125 Bitcoins, leading to a substantial rise in the monetary expenses associated with mining a single Bitcoin.
According to CoinShares’ latest analysis, the average cost of producing one Bitcoin has risen to approximately $49,500 due to cash costs reported in Q2. This is an increase from $47,200 in Q1. At current prices, it appears that mining Bitcoin remains a profitable venture for most miners.
Among Bitcoin mining companies, Cormint and TeraWulf are notable for their low production costs, spending around 15,000 dollars and 19,000 dollars on electricity per Bitcoin they mine, respectively.
Compared to other miners, they exceed $20,000; some like Marathon Digital Holdings and Hive Digital even have electricity costs that go beyond $40,000 for each mined Bitcoin.
Bitcoin mining costs vary based on factors including the miners’ power source, utility contracts and efficiency of mining equipment.
It could be that less profitable Bitcoin mining is leading mining companies to expand their revenue sources by incorporating Artificial Intelligence (AI), as suggested in a recent study.
Back in October, Bitcoin miner Hive disclosed that they had allocated a sum of approximately $66 million towards purchasing Graphic Processing Units (GPUs) from Nvidia. Notably, these GPUs are not intended for artificial intelligence tasks, as reported to CryptoMoon.
As a researcher delving into the realm of cryptocurrency, I’ve come across an interesting trend highlighted by a JPMorgan report in August. It appears that other Bitcoin miners are opting for strategic mergers and acquisitions as a means to reduce their BTC mining expenses.
Mining companies such as Riot Platforms and Cleanspark, who have a substantial amount of cash on hand, purchased other mining operations equipped with ready-to-use facilities. This move aims to boost their immediate hash rate and expand their electricity supply network, according to JPMorgan.
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2024-10-29 23:38