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Facing increased costs and reduced profitability, Bitcoin miners are adopting artificial intelligence and mergers to boost earnings, reveals CoinShares. The April halving heightened financial strains, with miners exploring new revenue streams to navigate the post-halving environment effectively.
Bitcoin Miners Cut Costs, Adopt AI Amidst April Halving’s Challenges
In a report published on October 28, cryptocurrency asset manager CoinShares stated that Bitcoin miners are reducing expenses and utilizing artificial intelligence in response to the ongoing fallout from the network's April halving.
Varied Outcomes Highlight Cost Strain on Miners
Based on CoinShares' Q3 mining report, Bitcoin miners have experienced a wide range of outcomes due to the rising cost and difficulty of mining BTC.
"The Bitcoin mining industry has faced significant challenges this year, with revenues and hash prices declining," stated CoinShares.
“Despite this, miners have continued to roll out new infrastructure and have committed to further expansion, anticipating future price increases.”
Impact of the Bitcoin Network Halving on Rewards
The amount of Bitcoin mined per block is halved every four years due to the halving event on the Bitcoin network.
The cost of mining one Bitcoin increased dramatically after the April event cut mining incentives from 6.25 BTC per block to 3.125 BTC.
"We estimate the average cost to produce one Bitcoin across all listed miners is now US$49,500 based on cash costs Q2 data, compared to US$47,200 in Q1, implying that for most miners at current prices it is a profitable endeavour," noted CoinShares.
TeraWulf and Cormint Lead as Lowest-Cost Producers
Two of the most cost-effective Bitcoin producers are TeraWulf and Cormint, with electricity costs of about $19,000 and $15,000 per BTC mined, respectively.
In comparison, other miners incur over $20,000 in power costs per Bitcoin, with some reaching over $40,000. This includes Marathon Digital Holdings and Hive Digital.
According to Cointelegraph, there are a number of variables that affect how much it costs to mine Bitcoin, such as the miners' power source, utility contracts, and the efficiency of their mining equipment.
AI and M&A Strategy Boost Income Diversification
"May explain the rising trend of mining companies diversifying their income streams to include AI," the paper states, referring to the possibility that less profitable BTC mining is to blame.
According to Bitcoin miner Hive, the $66 million it invested in Nvidia GPUs is for workloads that do not involve artificial intelligence.
An August JPMorgan research stated that in order to reduce the expenses of Bitcoin mining, other miners are resorting to mergers and acquisitions.
“Cash-rich miners like [Riot Platforms] and [Cleanspark] acquired other miners with turn-key facilities to increase near-term hashrate and increase their power pipeline,” according to JPMorgan.
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