(Bloomberg) – Last year on the campaign trail, Donald Trump promised to become the champion of US Bitcoin mining. But it’s clear that the group is struggling as American crypto miners begin publishing first-quarter revenue reports since Trump returned to the White House.
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Seven of the eight largest public miners based in the US are expected to cause losses when reporting first quarter results, according to analyst estimates compiled by Bloomberg. The financial struggle also occurred after Bitcoin hit a record above $109,000 in January, with quarterly prices averaged 75% higher than the first quarter of 2024.
Intensified competition and tariffs showed corporate weight, showing reduced profit margins and increased uncertainty around the growing operation. The broader stock market withdrawal from the highs reached shortly after Trump’s election victory has prompted more miners to revert to debt financing rather than raising cash from stock sales.
Mining difficulty is a measure of the computing power used to mine Bitcoin, breaking record highs over the past few months and showing that the competition is more competitive in the fixed amount of Bitcoin released regularly by the original blockchain. In the meantime, mining revenue has been declining due to energy prices hikes in some US states over the same period.
“This is an interesting quarter for Bitcoin miners and will likely be a difficult quarter over the past few months,” said Briand Beson, managing director of disruptive technology equity research at brokerage Clear Street. “We see margin compression and revenue reductions from Bitcoin mining due to the high global difficulty.”
Analyst estimates compiled by Bloomberg show that adjusted net profit for eight U.S. miners fell by about $1.3 billion in the first quarter from the same period last year. The group is estimated to have net income adjusted for the first quarter of 2024 to be $1.1 billion. Of the eight, of Clean Sparks, analysts are the only miners to record profits in the most recent quarter.
Analyst estimates that Riot Platforms Inc. is one of the largest public miners in the U.S. by revenue, and is expected to report quarterly losses and declines in revenues later on Thursday.
The fierce competition is partly due to the deployment of Bitcoin mining machines companies rushed to buy in the second half of 2024, when Bitcoin prices skyrocketed thanks to Trump’s pro-crypto stance. Such machines are specialized computers, mainly manufactured in Asia, which is a significant cost of mining operations, and companies are raising billions of dollars to make purchases.
The more computing power a miner can generate, the more likely it is to successfully process data blocks on the Bitcoin network and earn rewards in the form of tokens.
“When Bitcoin began its rally in November, we didn’t see any immediate response to the much higher level of the global hash, but we’re seeing that now,” Dobson said. A hash refers to an indicator of the amount of computing power used to cover cryptocurrency.
Growth in international mining operations from Russia and China is also increasing competition, according to Ethan Vera, chief operating officer of Crypto Mining Services Provider Luxor Technology.
The tariffs on machines made in Malaysia are set to see a much higher level. “If it goes up more, it’s very harmful and it could hinder the return profile and growth forecast from that,” Bella said. “I think everyone outside the US will benefit from tariffs when it comes in.”
US registered crypto miners face more uncertainty regarding expansion plans in the near future given rising machine costs and highly unpredictable tariff policies. Additionally, US miners were blacklisted by the US Department of Commerce, the largest supplier of Beijing-based Bitmain’s artificial intelligence Xiamen Sophgo Technologies Ltd., earlier this year, which was intensively inspected at the border earlier this year.
“The management team is hesitant to develop a multi-year strategy based on today’s tariffs when they realize that they can have very different conversations in three months about what the tariffs will look like,” Dobson said.
Bitcoin miners also face more difficulties in raising capital from the stock market, the main source of fundraising for most public miners. Energy-intensive mining processes require a large amount of capital to purchase machines, build data centers, and pay electricity bills that could be tens of millions of dollars.
Public mining companies use market offers to raise billions of dollars, some of which have turned to debt instruments such as fixed income securities and credit facilities for liquidity. Mara Holdings Inc., Riot and Cleanspark each have installed and expanded two recent credit facilities to issue convertible bonds.
“I don’t think big companies want to sell stocks in the current market. This is an expensive way for them to raise capital, but David Instruments is just low-cost capital,” Bella said.
Bitcoin Miner has been dealing with another blow since April last year. Code update reduced Bitcoin rewards. This has become the main source of revenue for miners. This pre-programmed event, called Harving, is designed to maintain a hard cap of 21 million Bitcoins by reducing its supply every four years.
Trump has committed to making all the bitcoin in the US, but the miners are primarily working on the side effects of his policy, and tariffs have affected their ability to hike the costs of mining rigs and raise capital while promoting overseas mining operations.
“When it comes to tariffs, I don’t think Trump has Bitcoin mining as his top priority,” Bella said. “To him, the trade war is the most important thing.”
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