Bitcoin miners are beginning to feel the squeeze now more than ever, as the network’s hashrate and mining difficulty continue to break all-time highs. This unprecedented growth creates immense stress on their business operations, affecting overall profitability and future investment plans.
As of October 3, 2023, the Bitcoin mining network just reached an all-time high mining difficulty of 126.98 trillion. The network’s 14-day average hashrate surged to an all-time high of 913.54 exahashes per second (EH/s). These increases require miners to use significantly more computational power to solve highly complex cryptographic puzzles in order to validate and process transactions.
The price of tier-one Application-Specific Integrated Circuits (ASICs) are now coming in between $10 and $30 per terahash. Miners face huge initial investments as payback periods for operations can extend up to 24 months. This forces them to have a longer payback period on their investment.
Many mining companies are meeting these market challenges head-on with pragmatic expansions and operational refurbishments. As an example, Cipher Mining (CIFR) plans a 70% increase in capacity by expanding its operations in, of course, Texas. Mara actually announced an impressive 30% increase in its hashrate over the month of May. On the other hand, Hive (HIVE) increased its hashrate by 32% as a result of opening a new facility in Paraguay.
The story of the publicly traded mining companies has been mixed at best. Canaan (CAN) and Bitfarms (BITF) have both declined by double digits in the last month. By contrast, IREN, Core Scientific (CORZ), and Bit Digital (BTBD) all saw increases over that same timeframe. With Terawulf citing electricity costs of $0.081/kWh as part of its first quarter report, it’s easy to see how significant these ops costs are.
Production costs are expected to be over $70,000 per Bitcoin (BTC), highlighting the immense financial pressure facing mining operations. The bottom line As miners face these challenges head on, focus on operational efficiency and managing resources wisely will drive success and long-term profit.
Lee Chia Jian
Blockchain Analyst
Lim Wei Jian blends collectivist-progressive values and interventionist economics with a Malaysian Chinese perspective, delivering meticulous, balanced blockchain analysis rooted in both careful planning and adaptive thinking. Passionate about crypto education and regional inclusion, he presents investigative, data-driven insights in a diplomatic tone, always seeking collaborative solutions. He’s an avid chess player and enjoys solving mechanical puzzles.
