Analysts at financial services company Cantor Fitzgerald have reportedly found that the eleven largest publicly traded Bitcoin (BTC) miners may have difficulty mining Bitcoin profitably if the price of BTC fails to increase significantly following the halving.
A Jan. 25 X post by CleanSpark executive chairman and co-founder Matthew Schultz, which cited research from Cantor Fitzgerald, found that many Bitcoin miners, including Marathon Digital, Riot Platforms, and Core Scientific, may come under increased pressure following Bitcoin's emergence. halving because Bitcoin miners' income from their activities does not outweigh their costs.
*BREAKING – new today!
No matter the department, the entire team at @CleanSpark_Inc is committed to efficiency. EFFICIENCY of Uptime, Equipment, Capital, Operations, Community Engagement, Energy, Strategy, Growth, and other metrics.
Today's brand new report from the research… pic.twitter.com/YgQ6XrIXh2
— S Matthew Schultz (@smatthewschultz) January 25, 2024
The United Kingdom-based Argo Blockchain (ARBK) miner and the Florida-based Hut 8 miner were identified as the most potentially unprofitable after the halving (at the current price of Bitcoin), with an all-in price per coin of $62,276 and $60,360, respectively.
In its latest mining report on January 5, Hut 8 reported its total holdings to be 9,195 BTC, which is worth $377 million at current prices.
The only firms that Cantor analysts expected to maintain profitability after the halving (assuming an average Bitcoin price of $40,000 and no dramatic changes in hash rate) were Singaporean miner Bitdeer and US miner CleanSpark.
Cantor's all-in-one-coin metric refers to the total costs a Bitcoin miner will incur to mine one Bitcoin, including electricity costs, hosting fees, and other cash expenses.
The Bitcoin halving, currently scheduled for April, means the mining rewards for Bitcoin miners will be cut in half.
While many market experts consider this reduction in supply to be bullish for the Bitcoin price in the long term, it also means that miners with high operating costs could suffer. The situation will only get worse if the price of Bitcoin does not reach a level that can cover these costs.
Many market commentators also believe that Bitcoin's price will experience a significant surge in the coming months following the halving.
On the subject: Shares of Bitcoin miner Hut 8 fell 23% amid accusations from short sellers
It is worth noting that while Bitcoin miners' earnings are closely tied to the price of Bitcoin, miners often use strategies to hedge potential losses arising from Bitcoin price volatility.
Dan Rosen, associate director of derivatives at Bitcoin miner Luxor, told Cointelegraph that miners often use a number of strategies to hedge their BTC exposure. This typically looks like buying derivative products such as hashrate futures contracts and BTC-related options to try to smooth out any potential volatility.
Cointelegraph contacted several Bitcoin miners named in the report for comment but did not receive an immediate response.