Bitcoin miners are facing a rapidly evolving landscape as both mining difficulty and hashrate continue to reach new heights. Publicly traded Bitcoin miners are approaching a combined market capitalization of $40 billion, marking a substantial increase from just $20 billion earlier in the year, according to data from Farside. This surge in market value comes amid Bitcoin’s price rally, which has propelled the cryptocurrency to near-record highs, with the asset hovering around the $96,000 mark.
However, despite the rise in Bitcoin’s price, miners are facing growing challenges in terms of revenue. The halving of the Bitcoin block reward in April has reduced the daily amount of Bitcoin mined by 50%, meaning that only 450 BTC are being mined each day. Fees paid to miners have also remained low, currently sitting at just 10 BTC ($946,000) on November 27, according to Glassnode. This has forced miners to either reduce their operational costs or find ways to generate additional revenue to stay profitable.
As if this weren’t challenging enough, the Bitcoin network’s mining difficulty is poised to increase once again. This adjustment, expected to rise by about 3%, comes on the back of a steadily climbing hashrate. The hashrate, which refers to the computational power used to mine Bitcoin, has remained above 700 exahash per second (EH/s) for more than a month, with the seven-day moving average standing at 726 EH/s as of November 27. This ongoing increase in computational power makes mining more competitive and costly for miners.
In response to these challenges, many Bitcoin mining firms have begun diversifying their operations. A growing number of miners are tapping into the rapidly expanding sectors of high-performance computing (HPC) and artificial intelligence (AI), which require vast amounts of computational power. One such miner, IREN (IREN), recently saw a 30% spike in its stock price, driven by increased interest in AI-related technologies.
Other companies, like Marathon Digital Holdings (MARA), have taken a different approach by expanding their Bitcoin holdings. MARA raised $1 billion through the issuance of a zero-percent convertible note, using the funds to purchase an additional 703 BTC. The company’s total Bitcoin holdings now amount to 34,794 BTC, providing it with a substantial reserve of the digital asset.
In the broader market, the CoinShares Valkyrie Bitcoin Miners ETF, which tracks the performance of publicly traded Bitcoin mining companies, has posted a solid 60% increase year-to-date. However, it still lags behind Bitcoin’s 113% year-to-date growth. As mining difficulty continues to increase, miners will need to adapt quickly to maintain profitability in a market that is growing more competitive and costly by the day.
