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Cantor Fitzgerald: Bitcoin Miners to Struggle to Turn Profits Post-Halving
The upcoming Bitcoin halving could result in losses for Bitcoin miners if the price of the cryptocurrency does not spike after. Analysts at financial services firm Cantor Fitzgerald have predicted that eleven of the largest publicly traded Bitcoin mining firms could struggle to maintain operations profitably.
In a January 25 post to social media platform X, CleanSpark co-founder Matthew Shultz shared the Cantor Fitzgerald research which showed that miners, including publicly listed firms Marathon Digital, Riot Platforms and Core Scientific may struggle to remain profitable following the Bitcoin halving because the Bitcoin miners will be compensated for their operations may not be enough to cover their operational costs.
United Kingdom-based Argo Blockchain (ARBK) and Florida-based Hut 8 Mining are among the Bitcoin miners that are very likely to become unprofitable after the next halving if the price of Bitcoin maintains the $40,000 level. The miners’ “all-in” cost-per-coin rates – the total cost of mining one Bitcoin – stand at $62,276 for Argo Blockchain and $60,360 for Hut 8 Mining.
The cost-per-coin metric relates to the total monetary cost of mining a single Bitcoin. Mining costs include electricity, hosting fees, hardware, and others. Miners can use the rewards gained from mining to offset these costs. The upcoming halving, scheduled for April, is set to cut their rewards in half.
Several industry players have projected that Bitcoin’s price will skyrocket over the months following the halving. Despite the potential price boost from Bitcoin’s limited supply post-halving, miners burdened by high operational costs could still struggle if the price does not rise high enough to cover their expenses.
Meanwhile, the analysts at Cantor Fitzgerald expect two firms – Singapore-based Bitdeer and US-based CleanSpark – to remain profitable post-halving, assuming an average Bitcoin price of $40,000 and no marked changes in hash rate. Bitdeer’s cost-per-coin is estimated at $17,744 while CleanSpark’s is at $36,896.
In his post, Shultz stated that his firm’s secret to low mining costs was efficiency across all departments.
*BREAKING – new today!
No matter the department, the entire team at @CleanSpark_Inc is committed to efficiency. EFFICIENCY of Uptime, Equipment, Capital, Operations, Community Engagement, Energy, Strategy, Growth, and other metrics.
Today’s brand new report from the research… pic.twitter.com/YgQ6XrIXh2
— S Matthew Schultz (@smatthewschultz) January 25, 2024
While the price of Bitcoin greatly affects miners’ profits, there are ways for them to hedge against losses. Speaking to Cointelegraph, Associate Director of Derivatives at Bitcoin Miner Luxor Dan Rosen pointed out that miners often take measures to mitigate potential losses resulting from price volatility. Some of these hedging strategies include purchasing derivatives products, including hash rate futures contracts and Bitcoin-linked options.
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Cantor Fitzgerald: Bitcoin Miners to Struggle to Turn Profits Post-Halving