Bitcoin Miners are struggling as both cryptocurrency prices and Bitcoin Network’s Harving Event puts great pressure on their business models. A recent JPMorgan report revealed that mining inventory saw a sharp decline in market value, falling 22% in February alone. A recession occurs as Bitcoin prices continue to fall and undermine the economics of mining operations.
Bitcoin Harving, which took place in April 2024, reduced mining rewards from 6.25 BTC to 3.125 BTC per block. This reduction significantly reduced both miners’ revenues and gross profits. As of half, average mining revenues have declined by 46% and total profits have declined by 57%, according to JPMorgan. The challenges got worse in February, when a decline in Bitcoin prices contributed to a further 9% decline in total profits.
In February, several prominent mining companies, including Riot Platforms (Riot), Bitdeer (BTDR), Marathon Digital (Mara), and Core Scientific (CORZ), reported fourth revenue. Despite better than expected results from Core Scientific, all of these companies saw their stock prices fall following their earnings report. The overall weakening of the crypto market has created a harsh environment for miners. Many people find it increasingly difficult to maintain profitability.
Despite these struggles, miners are turning to alternative revenue streams to offset losses. One promising tool is the high-performance computing (HPC) market, which is seeing an increasing demand from artificial intelligence (AI) models. Some mining companies leasing high-performance hardware or selling specialized ASIC microchips to take advantage of this demand. However, even miners exposed to HPC are facing difficulties. A notable set-off occurred in January when Chinese AI company Deepseek claimed that the model could provide similar results to Openai’s ChatGpt at cost, and that it could raise questions about future demand for data center capacity.
Despite these set-offs, certain mining stocks, especially those with significant AI exposures, such as Hut 8, are appreciated more than their peers. This suggests that even amid the wider industry struggle, some miners continue to see possibilities in AI ventures.
Bitcoin miners face a challenging environment as cryptocurrency prices fall, half the impact of Bitcoin and uncertainty in the AI market creates a complete storm. Some miners are optimistic about AI-related ventures, but the future of mining remains uncertain as they adapt to market changes.