The cryptocurrency industry's profit margins are tightening, and American mining companies are "hoarding coins" and facing tough times
It is estimated that in the third quarter of last year, the average cost for all publicly listed miners in the United States to produce Bitcoin was $55,950 per coin, an increase of 13% from the previous quarter, with an average cost of $106,000 including depreciation and stock-based compensation expenses. Bitcoin is currently priced at $101,439.1. This means that if the price of Bitcoin does not rise, it may lead to many miners shutting down their machines or going bankrupt
American Bitcoin mining companies are actively hoarding cryptocurrencies to cope with intensifying resource competition and tightening profit margins.
On January 7th, the Financial Times reported that several mining companies, including Riot Platforms and CleanSpark, have raised over $3.7 billion from investors since last November, primarily to purchase Bitcoin. These companies typically raise funds by issuing zero-interest or low-interest convertible bonds.
This trend is closely related to Donald Trump's election as President of the United States. Trump promised that Bitcoin would be "mined, minted, and manufactured" in the U.S. However, analysts believe that for many mining companies, hoarding Bitcoin is more about coping with the financial pressure brought on by high energy costs. Core Scientific's Chief Development Officer Russell Cann stated:
"It's not as simple as saying everything is fine just because Bitcoin prices are rising; there are still complex challenges regarding profitability and grid access."
According to investment group CoinShares, in the third quarter of last year, the average cost for all publicly listed miners in the U.S. to produce one Bitcoin was $55,950, a 13% increase from the previous quarter. The average cost, including depreciation and stock-based compensation, was $106,000. Bitcoin is currently priced at $101,439.1. This also means that if Bitcoin prices do not rise, many miners may shut down their machines or go bankrupt.
However, the rise in Bitcoin prices has not alleviated the pressure faced by mining companies. With new competitors entering the market, the total computing power required to protect the network (hash rate) continues to climb, reaching a record high last Friday. This could offset the benefits brought by rising Bitcoin prices and further squeeze corporate profits. CoinShares' research director James Butterfill warned, "The hash rate is on an astonishing upward trend, indicating a large amount of new hardware coming online; if prices pull back, miners with higher production costs will be more vulnerable."
At the same time, American mining companies are also facing fierce resource competition from domestic sources. The U.S. Energy Information Administration estimates that Bitcoin mining may have consumed 2.3% of the country's electricity grid. It is predicted that by 2025, the energy demand from large miners will increase by 60%.
The greater challenge comes from large AI developers with more financial resources. Cann predicts that in the coming years, most Bitcoin computing power will shift outside the United States. Some mining companies are seeking faster paths to profitability; companies like Hut 8, Core Scientific, and Hive have already turned to leasing their data center capacity to AI hyperscale enterprises. CleanSpark's CEO Zach Bradford stated:
"The rise in Bitcoin is indeed helpful, but if energy prices soar tomorrow, it will still be a tough day for Bitcoin miners."