According to observations by analysts from financial services company Cantor Fitzgerald, if the price of Bitcoin (BTC) does not rise significantly after the halving, the 11 largest publicly traded Bitcoin mining companies may have difficulty making profits through mining.
Matthew Shultz, Chairman and Co-Founder of American Bitcoin mining company CleanSpark, cited Cantor Fitzgerald’s research on the X platform last Friday (26th). The data shows that many mining companies, including Marathon Digital, Riot Platforms, and Core Scientific, may face greater pressure after Bitcoin halving, as the Bitcoin they obtain from operations may not offset costs.
The research indicates that UK mining company Argo Blockchain and US mining company Hut 8 may be the least profitable mining companies after halving (based on current Bitcoin prices), with their “all in per coin” costs being $62,276 and $60,360 per Bitcoin, respectively. Hut 8 stated in its latest mining operation report released on January 5th that its total Bitcoin reserves amount to 9,195 BTC, valued at $377 million at current prices.
Cantor Fitzgerald’s analysis of publicly traded mining companies’ all in per coin costs, source:
Matthew Shultz
Cantor’s “all in per coin” metric refers to the total cost for Bitcoin miners to produce one Bitcoin, including electricity costs, hosting fees, and other cash expenses. Cantor analysts predict that assuming Bitcoin maintains an average price of $40,000 and hash rate remains stable, the only companies that can remain profitable after halving are Singaporean mining company Bitdeer and CleanSpark.
According to CoinMarketCap data, as of the time of this article’s publication, there are only 83 days left until the Bitcoin mining reward halving.
Hedging Risks with Derivatives
While many experts believe that the decrease in supply is bullish for Bitcoin in the long term, it also means that miners with high operating costs may be affected. Dan Rosen, Derivatives Director at Bitcoin mining company Luxor, pointed out that miners typically employ strategies to hedge potential losses from Bitcoin price fluctuations.
Rosen stated in an interview with Cointelegraph that strategies miners often use include purchasing derivative financial products such as hash rate futures contracts and Bitcoin-related options to try to mitigate any potential volatility.