According to the recent Coinshares industry, the average cost of one Bitcoin (BTC) rose sharply in the fourth quarter of 2024, reaching $82,162 among publicly listed miners, representing a quarterly 47% increase. Report.
The report noted that the expansion of accelerated hardware, tax costs, and the growing non-cash expenses associated with depreciation and stock-based compensation are the drivers behind this increase in costs.
Excluding HUT 8, which recorded substantial tax-related expenses related to unrealized profits, the average cash cost was $75,767. Including non-cash expenses, the average production cost rose to $137,018 per Bitcoin.
Coinshares was attributable to increased input costs due to hardware turnover and speed of competition and increased competition, exacerbated by market price fluctuations and sector-wide compression valuation multiples.
Improve efficiency and reduce costs
HUT 8 reported the highest unit costs in the dataset due to a $93 million deferred tax liability and increased interest costs from convertible memos and credit facilities. As a result, the total cost per bitcoin for that quarter exceeded $281,000.
The company has pledged to secure 968 BTC 30,000 Antminer S21+ ASIC funding and is aiming to increase its self-mining hash rate to 25.1 exahash per second (EH/s), predicting 16 joules per 16 joules (J/TH).
Depreciation remains one of the most influential expenses across the sector. Unlike traditional industries where equipment is depreciated due to physical use, ASICs are depreciated as they become obsolete due to rapid technological advancements.
Miners need to upgrade their machines frequently to stay competitive. This accelerates non-cash writes and compresses margins.
Despite inflation across the mining cost sector, a few companies reduced costs per bitcoin in the fourth quarter.
CleanSpark is supported at 18 j/th with a 13% reduction in all-in costs, a 15% reduction in cash costs, a 56% increase in deployed hashrate, an increased operational uptime (98%), and improved fleet efficiency.
Furthermore, operating expenses such as SG&A and stock-based compensation have decreased. Aylen reduced the electricity costs at its Childress facility by switching to spot pricing.
The company increased its operating hashrate from 12.2 to 22.6 EH/s in the fourth quarter, reporting an average fleet efficiency of 15 j/TH. Cormint reduced total mining costs over a 44% quarter than the quarter by dropping to electricity prices to 1.8¢/kWh.
Cost composition and industry outlook
Coinshares data shows that electricity remains the biggest factor in direct mining costs. However, non-cash items such as depreciation and amortization contribute significantly to the overall cost structure.
Companies such as Mara Holdings, Cipher Mining and Riot Platforms report relatively balanced cost profiles, but overall rising input costs have reduced margins of profitability.
The charts featured in the Coinshares report show that most miners were still able to make money in the fourth quarter, as the average Bitcoin price remained close to $82,000.
However, second quarter forecasts suggest that they will move ahead. The increase in tariffs on imported rigs from China and Malaysia ranges from 24% to 54%, which could raise future break-even costs for miners relying on foreign-made equipment.
The data also show that miners’ valuation doubles are compressed, reflecting the expectations of zero-sum dynamic investors in hashrate competition.
In response, some miners are re-allocating capital to data center infrastructure and high-performance computing (HPC) to diversify revenue streams beyond block compensation and transaction fees.
The industry continues to improve hardware efficiency, with the new ASIC model averaged 20 watts (w/th) per terrahash, a five-fold improvement since 2018.
This will ensure that the total network energy usage is stable even if the hashrate skyrockets to 900 EH/s by the end of the year. Coinshares now predicts that the network will pass a single Zetahash (Zh/s) threshold per second by mid-2025.
