The crypto downturn has pushed a slew of Bitcoin miners to the brink of unprofitability, prompting operators to scale back the energy-hungry machines that keep the blockchain running.
A closely watched measure of mining revenue known as the hash price recently touched a record low, according to Hashrate Index. The median cost to mine - including overhead investment and financial expenses - remains above that level, meaning that total expenses are greater than revenue for most of the publicly-traded miners they track, according to industry publication and data provider TheMinerMag.
“As hash price falls, we have seen almost a 8% drop in network hashrate, this is a result of miners using firmware to underclock their machines to save power,” said Ethan Vera, chief operating officer at mining services provider Luxor Technology, which trades used rigs.
The downturn highlights the ultracompetitive business conditions resulting from a once-every-four-years event that cuts in half the so-called mining reward, which is the amount of Bitcoin released from the network to compensate companies for processing transactions. The last “halving” was in April 2024. It also validates the pivot by many of them toward hybrid models built around artificial intelligence and high-performance computing that have made the shares of the companies among the best market performers this year.
While a cohort of miner-turned AI infrastructure companies have drawn tens of billions of dollars to build out high-tier data centers, Bitcoin mining still remains their largest revenue stream. Core Scientific Inc. and Terawulf Inc. derived just about 21% and 14% of their third-quarter revenue from the high-performance compute services, respectively. IREN Ltd., which has seen its shares surge more than fourfold this year, gets just 3% of revenue from HPC, TheMinerMag estimates.
The break-even price for 14 publicly-traded miners has climbed about 20% from a mean of about $90,000 per Bitcoin in the third quarter, according to TheMinerMag. That would leave most miners in the red with the price of Bitcoin now lower, the firm estimated. Bitcoin’s average price is around $104,000 so far in the fourth quarter, down from about $114,000 in the previous three months. Bitcoin traded at around $92,000 on Wednesday.
“Investors that are piling in or had piled in to these companies over the most recent months are mainly concerned about the AI business, with very little interest for their Bitcoin mining operations.” said Mike Colonnese, managing director of equity research at HC Wainwright & Co. “You will see some of the group unplug their mining machines and put up AI data centers. You are going to see a lot of that over the coming years.”
