Bitcoin Miners Diversify as Mining Profits Decline Amid Rising Hash Rates
Bitcoin has surged over 12% in the past week, with the network’s hash rate hitting an all-time high, reflecting growing competition among miners. Yet, mining profitability is dwindling as it’s never been harder to earn from bitcoin mining. Even as bitcoin becomes more entrenched in mainstream finance, institutional capital has poured in since the SEC approved spot bitcoin exchange-traded funds earlier this year. The network is now secured by a vast, decentralized system of miners working tirelessly, but increased participation means more competition for dwindling rewards.
This year, a pivotal bitcoin event known as the halving—where new bitcoin issuance is cut in half—has added further pressure, reducing miners’ income while operating costs remain constant. Historically, this event often precedes a wave of bankruptcies among mining firms, squeezing margins and forcing companies to rethink their strategies. The impacts are already visible: Marathon Digital has plummeted nearly 30% in 2024, while Riot Platforms has tumbled 53%.
Despite bitcoin’s 44% rise this year, North American publicly traded mining firms minted a smaller portion of the total network’s bitcoin in August compared to July, according to Jefferies. The average daily revenue per exahash—a key profitability metric—dropped by 11.8% from the previous month, highlighting the tough economics miners face.
Marathon’s CEO, Fred Thiel, remains optimistic about future prospects, emphasizing that recent machine upgrades can double hashing capabilities without increasing energy consumption. “No need to add sites or power, just upgrade systems,” Thiel noted. Similarly, Riot’s CEO, Jason Les, reaffirmed his bullish stance, stating, “Bitcoin is the most sound money in the world, and low-cost mining is an efficient way to get exposure to it.”
While many miners are grappling with tighter margins, Core Scientific, a top publicly traded bitcoin miner, is thriving. After emerging from bankruptcy in January, Core Scientific has successfully pivoted, leveraging its infrastructure to power artificial intelligence (AI) and high-performance computing (HPC). Core Scientific’s recent $6.7 billion partnership with CoreWeave, an Nvidia-backed GPU provider, highlights the growing trend of bitcoin miners diversifying into AI and high-performance computing, leveraging their existing infrastructure for new opportunities.
Bernstein recently highlighted Core Scientific as the best-performing miner, particularly among those diversifying into AI and HPC. With a substantial co-location contract with a leading GPU cloud provider, Core Scientific is positioning itself as a major player in the data center industry. CEO Adam Sullivan noted, “Our facilities were developed to be multi-use, not just for bitcoin mining but also for high-performance computing.” If fully executed, Core’s 700-megawatt capacity dedicated to AI and HPC could make it the third-largest data center company listed in the U.S.
The next three years are seen as crucial for Core Scientific, as the company seeks to carve out a niche in the rapidly expanding data center market. Sullivan added, “Every big data center company carved out a niche; for bitcoin miners, that niche is becoming one of the largest found in the industry.”
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