According to observations from analysts at financial services company Cantor Fitzgerald, if the price of Bitcoin (BTC) does not rise significantly after the halving, the 11 largest Bitcoin mining companies may have difficulty making profits through mining.
Matthew Shultz, Chairman and Co-founder of American Bitcoin mining company CleanSpark, cited research from Cantor Fitzgerald on Friday (26th) on X platform, which showed that several mining companies including Marathon Digital, Riot Platforms, and Core Scientific may face greater pressure after the 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 the halving (based on the current price of Bitcoin), with “all in per coin” costs of $62,276 and $60,360 per Bitcoin, respectively. Hut 8 stated in its latest mining operations report released on January 5th that it holds a total reserve of 9,195 BTC, valued at $377 million at the current price.
Cantor Fitzgerald’s analysis of the mining companies’ all in per coin costs, source:
Matthew Shultz
Cantor’s “all in per coin” indicator refers to the total cost for Bitcoin miners to produce one Bitcoin, including electricity costs, hosting fees, and other cash expenses. Cantor analysts expect that, assuming Bitcoin is at an average price of $40,000 and the hash rate does not change significantly, the only companies able to remain profitable after the halving are Singaporean mining company Bitdeer and CleanSpark.
According to CoinMarketCap data, at the time of writing, 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 the long-term price of Bitcoin, it also means that miners with high operating costs may be affected. Dan Rosen, Derivatives Vice President at Bitcoin mining company Luxor, pointed out that miners typically adopt 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.
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Related report: “US mining company Core Scientific focuses on efficiency, may hedge if Bitcoin rises to $40,000”