In a notable development, Bitcoin mining costs surged by 47% during the fourth quarter of 2024, reaching an average of $82,162 for each Bitcoin mined by publicly listed companies, according to the latest report from CoinShares.
What is the reason behind this jump?
The report attributed this significant increase to several interrelated factors, most notably:
Rapid expansion in the use of advanced mining devices.
Increased tax liabilities on companies.
An increase in non-cash costs such as depreciation and stock-based compensation.
When accounting for all expenses, including non-cash costs, the cost to produce a single Bitcoin reached up to $137,018 — an unprecedented figure in the industry's history!
Hut 8 leads... but at a high cost!
Hut 8 had the highest costs on the list of companies, with a Bitcoin mining cost of $281,000, due to massive deferred tax liabilities of $93 million, in addition to high debt interest.
Nevertheless, the company seeks to expand its capabilities by financing the purchase of 30,000 Antminer S21+ mining devices, which will raise its capacity to 25.1 EH/s with an efficiency of 16 J/TH.
Amid pressures and challenges... some companies excel!
The picture wasn't bleak for everyone, as some companies have succeeded in reducing costs and achieving operational gains, most notably:
Cleanspark: Reduced cash costs by 15% thanks to efficiency improvements and increasing uptime to 98%.
IREN: Reduced electricity costs by 39% through spot pricing, and increased its hash rate to 22.6 EH/s.
Cormint: Reduced total mining costs by 44% benefiting from low electricity prices (only 1.8 cents per kilowatt-hour!).
The sector faces customs and financial challenges.
While companies are recording these improvements, a new challenge looms: high tariffs on mining equipment imports from China and Malaysia, ranging from 24% to 54%, which could raise future breakeven costs and reduce profit margins.
Data also indicates that the valuation multiples of mining companies are declining, reflecting investor expectations of slowing sector growth and stable competition.
And yet... the technology resists!
Despite rising costs, innovation does not stop. Modern mining devices have become more efficient, averaging 20 watts per terahash — a fivefold improvement compared to 2018.
This progress has contributed to maintaining the overall energy consumption stability of the network, despite the hash rate rising to 900 EH/s.
CoinShares even expects the Bitcoin network to exceed 1 zettahash/second (ZH/s) by mid-2025!
In conclusion, it seems that the Bitcoin mining industry is entering a stage of "costly maturity", facing significant financial and operational challenges, but it continues to evolve with the support of innovation and infrastructure expansion.