TLDR
- Bitcoin miners face record-low profitability, with hashprice dropping from $55/PH/s to $35/PH/s in November.
- Public miners are struggling with margins, as median hashcosts sit around $44/PH/s, below current revenue.
- Network hashrate nearing 1.1 ZH/s, leading to longer payback periods, now exceeding 1,000 days for new rigs.
- Miners are shifting to liquidity preservation, with CleanSpark repaying its Coinbase-backed credit line.
- Public miners raised $3.5 billion in debt during Q3, with Q4 funding now focused on higher-cost senior secured notes.
Bitcoin miners are experiencing their toughest profitability environment to date. A sharp pullback in Bitcoin’s price throughout November has impacted miner revenue. According to report by Miner Weekly, the average hashprice dropped from $55/PH/s in Q3 to around $35/PH/s. This sharp decline has caused miners’ earnings to fall below the $44/PH/s median cost for major public miners, leading to a financial strain.
Hashrate Revenue Plummets, Margins Compress for Bitcoin Miners
The drop in hashprice represents a change in Bitcoin mining economics. The available market data confirms that public miners are now facing tight margins, as many are struggling to break even. “The median total hashcost among major public miners sits around $44/PH/s,” a recent report highlights. This figure includes both operational expenses and corporate overheads, making it even more difficult for miners to maintain profitability.
With the network’s hashrate nearing 1.1 ZH/s, miners are feeling the pressure. The increase in network difficulty has further strained revenue. Even the most efficient mining rigs are now facing payback periods exceeding 1,000 days. These long payback periods are longer than the 850 days until the next Bitcoin halving.
Miners Shift Focus to Liquidity Preservation and Debt Management
Bitcoin miners are adapting to the harsh economic environment by shifting their strategies. CleanSpark, for example, repaid its Coinbase bitcoin-backed credit line after raising over $1 billion in convertibles. This decision came at a time when hashprices were at an all-time low, signaling the urgency for miners to preserve liquidity and reduce leverage.
As financial stress mounts, public miners are raising capital to weather the downturn. In Q3, they raised $3.5 billion in debt, with another $1.4 billion in equity financing. However, the funding environment has shifted in Q4. Miners are now turning to higher-cost senior secured notes, with some companies raising close to $5 billion.
Despite early signs of growth in alternative revenue streams, such as HPC and AI, Bitcoin miners face a difficult road ahead. Early numbers show promise, but the sector has yet to see notable scaling in these areas. For now, the Bitcoin mining space is navigating a phase of reduced profitability, and capital-raising activity has surged in response to this challenge.
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