Bitcoin Miners Face Profitability Challenges Post-Halving

Amid the ongoing changes in the crypto space, Bitcoin miners are now confronted with potential profitability pressures, according to analysts at the financial services company Cantor Fitzgerald.

Research indicates that the eleven largest public Bitcoin miners may find it challenging to mine BTC and reap profits if the BTC price does not experience a significant increase after the upcoming halving.

11 Bitcoin Miners Expected to Face Profitability Challenges

This information, revealed in a post by CleanSpark's CEO and Co-founder, Matthew Shultz, highlights concerns for major players in the mining industry.

Cointelegraph reports that prominent entities like Marathon Digital, Riot Platforms, and Core Scientific might face increased pressure as the revenue generated from their mining operations may not be sufficient to cover operational costs.

It is essential to acknowledge that Bitcoin miners' income is closely tied to the price of Bitcoin. However, Luxor, a crypto mining executive, emphasizes that miners often employ strategies to mitigate potential losses arising from Bitcoin price volatility.

Argo Blockchain (ARBK) based in the UK and Hut 8 Mining in Florida are identified as the most likely to face profitability challenges post-halving, given the current Bitcoin price. The all-in cost per coin for Argo Blockchain is US$62,276, and for Hut 8 Mining, it is US$60,360.

In its latest update on January 5, Hut 8 reported a total reserve of 9,195 BTC, valued at US$377 million at the current price.

Cantor's analysis estimates that, assuming an average Bitcoin price of US$40,000 and no drastic changes in the hash rate, only two companies are likely to remain profitable post-halving: Singapore-based Bitdeer and US-based CleanSpark.

The all-in per coin metric used by Cantor refers to the total costs incurred by Bitcoin miners in producing one Bitcoin. This includes electricity costs, hosting fees, and other miscellaneous costs.

The upcoming Bitcoin halving, scheduled for April, involves halving the mining reward for BTC.

While many market experts see this supply reduction as a bullish sign for Bitcoin's long-term price, it poses challenges for miners with high operational costs.

These challenges will exacerbate if the Bitcoin price fails to reach levels that can cover these expenses.

Some market commentators predict a significant price surge for Bitcoin in the months following the halving.

Dan Rosen, the derivatives director at Bitcoin mining association Luxor, explains that miners often use various strategies to protect their exposure to BTC. This typically involves purchasing derivative products such as hash rate futures contracts and BTC-related options to mitigate potential volatility.

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