Bitcoin Miners Weather the Storm, Seek New Opportunities
While the price of Bitcoin can fluctuate wildly, the core business of mining continues to evolve. Analysts are advising investors to look beyond the immediate price swings and focus on how miners are adapting to market conditions and exploring new revenue streams.
Recent reports from JP Morgan indicate that publicly traded Bitcoin mining companies lost a collective $23 billion in market capitalization during the past month alone. This downturn coincided with a period of volatility, with Bitcoin’s price dropping from over $102,000 to around $78,000, compounded by concerns about global trade.
“We think Hut 8 is close to signing a major HPC/AI deal with a hyperscaler,” said Mike Colonnese, a crypto analyst.
Hut 8, a prominent player in the industry, reported a 69% increase in revenue for 2024, reaching $162.4 million. However, analysts like Mike Colonnese see even greater potential in the company’s strategic moves. Colonnese, a managing director and senior crypto analyst at H.C. Wainwright, is optimistic about Hut 8’s future, particularly highlighting their initiatives to diversify revenue and reduce costs.
Hut 8 noted in their recent report that they have managed to slash their energy costs by 30%. “The company would build and operate an HPC/AI data center for a client…” Colonnese explained. This enabled an 8-point increase in gross margin per Bitcoin mined during this quarter.
Colonnese anticipates mining expenses will likely increase in 2025 due to the network’s growing difficulty. “However, I expect BTC price appreciation to outpace growth in difficulty,” he added, which should improve mining economics in 2025.
Nishant Sharma, founder of BlocksBridge Consulting, emphasizes the importance of monitoring miners’ operational costs. Sharma, formerly of Bitmain, uses a metric he calls “hashcost,” which measures miners’ fleet efficiency and the expenses needed to keep the operations running.
Sharma said, “This provides a clearer picture of how cost-effectively the company mines Bitcoin…when assessing a mining company’s stock, investors should look beyond just mining efficiency.”
Many mining companies, including Hut 8, have already diversified by providing data center space for AI and high-performance computing (HPC) clients. Others are moving towards designing and manufacturing their own ASIC chips, the specialized hardware that dramatically improves mining efficiency.
Bitdeer is one of them that’s working to design their own ASIC chip. Core Scientific announced in 2024 that it was teaming up with Jack Dorsey’s Block Inc. to design these highly efficient chips. Denise Sterling, Core Scientific’s chief financial officer, said, “We do not expect to increase or refresh our Bitcoin mining fleet until we procure the new Block ASIC chips in the second half of 2025.”
Max Shannon, an analyst at CoinShares, noted that Core Scientific’s mining performance was “unimpressive.” Shannon, however, pointed out that the high-performance computing (HPC) segment of Core Scientific delivered strong results.
Shannon is also keeping close watch on Bitdeer and its SEALminer A2 rigs, which have already captured an estimated 5% of market share. “This segment offers greater operational flexibility, as the company can utilize machines at cost rather than purchasing at market prices, reducing expenditure,” he said.
As Bitcoin mining continues to evolve, industry players are employing new strategies, from securing new clients to designing new technology. Investors are watching closely, evaluating how miners are managing costs and their investments in technology.
