Miners Predicted to Operate at a Loss in the Absence of Bitcoin Price Growth, Says Cantor Fitzgerald
Cantor Fitzgerald warns that several public mining companies, including Marathon Digital, Riot Platforms, and Core Scientific, may incur losses after the reduction in Bitcoin mining rewards if the cryptocurrency's price remains at $40,000. This information is reported by Cointelegraph, citing a Cantor Fitzgerald report.
The report notes that Argo Blockchain from the UK and Hut 8 from the US are most vulnerable in light of the upcoming halving, as their expenses exceed the current Bitcoin price.
The Bitcoin halving, scheduled for April, involves halving the rewards for miners for confirming a block of transactions. While the halving is considered a bullish factor for the long-term prospects of Bitcoin, miners with high operational costs may face difficulties if the Bitcoin price does not rise sufficiently to cover their expenses.
According to Cantor Fitzgerald's analysis, the only companies that will remain profitable after the halving at a $40,000 Bitcoin price are Bitdeer from Singapore and CleanSpark from the US. Both companies have an advantage in terms of lower operational costs. The report specifies that the cost of mining one Bitcoin for Bitdeer is $17,744, and for CleanSpark, it is $36,896.
Analysts from CoinShares previously reached similar conclusions, noting that only miners Bitfarms, Iris, CleanSpark, TeraWulf, and Cormint will maintain profitability at a $40,000 Bitcoin price. Other miners may need to use reserves and issue additional shares to ensure financial stability.
Dan Rosen, Director of Derivatives at mining company Luxor, explained that miners actively employ various risk-hedging strategies, such as purchasing derivatives and Bitcoin options. The Russian mining industry also received recognition for its advantages, including available resources and more favorable electricity prices. BitRiver's estimates indicate that the cost of Bitcoin mining in Russia after the halving will be $24,000.
Direct costs of producing one Bitcoin before and after halving. Source: CoinShares