In a new report, Coinshares offers important insights into the economics of Bitcoin (BTC) mining. This has evolved following the increase in the network’s half of 2024 and hashrate.
According to Coinshares, weighted average cash costs for mining Bitcoin among publicly available mining companies increased 47% from $55,950 in the third quarter of 2024 to about $82,162 in the fourth quarter. Excluding the non-standard shed 8, the average cost was slightly lower at $75,767, representing a significant increase of 35% per quarter.
When non-cash expenses such as depreciation and stock-based compensation are included, the total average cost will rise to $137,018 per Bitcoin, and Bitcoin’s current market price is well above about $95,000. Nevertheless, many miners were able to maintain profitability due to rising Bitcoin prices and improved strategic efficiency.
The Bitcoin Network’s hashrate accelerated sharply in the fourth quarter, reaching an all-time high of 900 seconds (EH/s), breaking the previous estimate of Coinshare 765 EH/s. The company currently predicts that the network will reach the symbolic 1 Zettahash/2 seconds (Zh/s) milestone as early as July 2025, rising to 2.0 Zh/s by early 2027.
This exponential growth was driven by a combination of positive political developments and powerful Bitcoin price rallies that encourage miners to quickly deploy new hardware.
However, Coinshares is focusing on changing investors’ feelings. Mining companies are valuing twice, suggesting that bitcoin mining is seen as net zero business, where profits for one miner are another loss. As a result, many companies host data center infrastructure and high performance computing (HPC) to diversify revenue streams.
While most miners see an increase in production costs, CleanSpark, Iren, and Cormint are pushing against this trend, reducing revenue costs per bitcoin by 8%, 39% and 44%, respectively.
The notable outlier was HUT 8, reporting a tax expense of $281,000 per Bitcoin at $281,000. This is part of a $93 million deferred tax liability related to Bitcoin Holdings’ unrealized profit. The additional financial burden was due to interest costs associated with the $150 million court convertible notes and increased borrowings from Coinbase’s credit facility.
*This is not investment advice.
