According to a recent report from broker Bernstein, Bitcoin miners are planning to add considerable capacity to their operations. The 16 largest publicly listed mining companies currently account for 16% of all Bitcoin mined and collectively operate with a mining capacity of 72 exahashes per second (EH/s). These firms are planning to increase that capacity by 182% over the next 2-3 years.
Crypto Mining Industry Poised for Significant Growth
Bernstein’s report posits that the largest beneficiaries of this capacity increase will be those miners with lower production costs and less debt. Such companies will have a greater ability to withstand any volatility in Bitcoin’s price and spikes in production costs due to the impending Bitcoin halving in Q1 2024.
Preparing for the Next Bitcoin Halving
With the Bitcoin price currently around $30,000 and 15 of these companies operating with production costs below $15,000 per Bitcoin, the upcoming halving—which will double production costs—could push some miners to break-even if prices do not increase.
However, Bernstein’s analysts suggest that if the market sees positive momentum from Bitcoin exchange-traded fund (ETF) approvals and increased institutional participation, these factors could provide miners with enough “margin room” for the 2024 halving.
Debt-to-Equity Ratios and Holding Strategies
Three of the miners have a debt-to-equity ratio of more than 1, reducing their ability to weather periods of low Bitcoin prices. Four companies—Riot, Marathon Digital, Hut 8, and Hive Digital—hold Bitcoin on their balance sheets, allowing them to wait for higher prices before selling and potentially making greater realized gains on the Bitcoin they mine.
Leave a comment