Leading Bitcoin mining companies, including Mara Holdings, Riot Platforms, and CleanSpark, are actively accumulating cryptocurrency in an effort to protect their profits from rising energy costs, despite Bitcoin's recent record price of $100,000. Since November, miners have attracted over $3.7 billion in investments, mainly through the issuance of zero or nearly zero-coupon bonds to finance Bitcoin purchases and prepare for further market changes, reports FT.
This activity coincided with Donald Trump's victory in the U.S. presidential elections, where he promised that Bitcoin would be "mined, minted, and produced in the USA." However, industry representatives suggest that the main reason for the large-scale cryptocurrency buying spree is the economic pressure caused by high electricity costs and expectations of future Bitcoin price growth.
Bitcoin mining profitability has significantly decreased following April's halving event, when the daily new coin rewards for miners dropped from 900 to 450. Along with rising energy prices, this has intensified pressure on miner profits. According to investment group CoinShares, the average cost to mine one Bitcoin for public companies in the U.S. rose to $55,950 in Q3. Considering depreciation and overhead costs, the total cost could reach $106,000 per coin. Meanwhile, Bitcoin's price fluctuates around $102,175.
"Had the price of Bitcoin not risen, we would have seen many companies shutting down their equipment or declaring bankruptcy," said CoinShares' research head James Butterfill.
Despite the rise in prices, miners are facing increased competition and a growing hash rate — the total computational power needed to secure the Bitcoin network. Last Friday, the hash rate reached an all-time high, which threatens to reduce miners' profits due to the increased difficulty of mining new coins.
"We are witnessing a rapid increase in Bitcoin's hash rate, which indicates the mass deployment of new equipment. This makes companies with high mining costs particularly vulnerable in the event of a price correction," added Butterfill.
In the US, miners are also facing fierce competition for energy resources. In Texas, the largest state for crypto mining, regulators have mandated that data centers consuming more than 75 MW submit annual reports on their energy usage. It is expected that by 2025, energy demand among large users will increase by 60%.
However, the biggest challenge for miners may come from companies developing artificial intelligence. AI companies have more financial resources and significantly increase the demand for computational power and energy.
"The demand for artificial intelligence in the US will significantly impact how many new Bitcoin mining farms can be connected to the grid," said Core Scientific representative Russell Kenn. "From an economic perspective, it makes more sense to use these resources for AI data centers rather than Bitcoin mining."
Some companies, such as Mara Holdings, plan to move half of their farms abroad by 2028 to regions with an energy surplus, such as Kenya, the UAE, and Paraguay. Others are trying to profit from AI. NVIDIA graphics cards, typically used for cryptocurrency mining, are also suitable for processing large data volumes in artificial intelligence. Companies like Hut 8, Core Scientific, and Hive have already begun renting out their data centers to AI hyperscalers.