Bitcoin (BTC) Mining Faces ‘Incredibly Difficult’ Market as Power Becomes the Real Currency

Jackson Hole, Wy. — Bitcoin miners have lengthy been outlined by the boom-and-bust rhythm of the four-year halving cycle. But the recreation has now modified, based on a few of the business’s most distinguished executives at the SALT convention in Jackson Hole earlier this week.

The rise of exchange-traded funds, surging demand for energy, and the prospect of synthetic intelligence (AI) reshaping infrastructure wants imply that miners should discover methods to diversify or threat being left behind.

“We used to come here and talk about hash rate,” stated Matt Schultz, CEO of Cleanspark. “Now we’re talking about how to monetize megawatts.”

For years, mining firms—which derived their important income solely from mining bitcoin—lived and died by the four-year bitcoin halving cycle. Every cycle, rewards had been slashed in half, and miners scrambled to chop prices or scale as much as survive. But that rhythm, based on these executives, not defines the enterprise.

“The four-year cycle is effectively broken with the maturation of bitcoin as a strategic asset, with the ETF and now the strategic treasury and whatnot,” Schultz stated. “The adoption is driving demand. If you read anything about the most recent ETF, they’ve consumed infinitely more bitcoin than have been generated so far this year.”

Cleanspark, which now operates 800 megawatts of vitality infrastructure and has one other 1.2 gigawatts in growth, has begun turning its consideration past proof-of-work. “Our speed to market with the electricity has created opportunities such that now we can look at ways to monetize power beyond just bitcoin mining,” he stated. “With 33 locations, we now have a great deal more flexibility than we ever did before.”

A brutal enterprise

Schultz is just not alone in calling the business’s monumental shift in enterprise mannequin.

Patrick Fleury, CFO of Terawulf, echoed the sentiment and didn’t attempt to sugarcoat the revenue squeeze the miners at the moment are feeling.

“Bitcoin mining is an incredibly difficult business,” he stated. He broke down the economics of bitcoin mining in easy phrases: with electrical energy priced at 5 cents per kilowatt hour, it presently prices round $60,000 to mine a single bitcoin. At a bitcoin value of $115,000, meaning half the income is consumed by energy alone. Once company bills and different working prices are factored in, the margins tighten rapidly. In his view, profitability in mining hinges virtually completely on securing ultra-low-cost energy.

For Fleury, the deeper downside isn’t simply energy prices — it’s the relentless enlargement of the community itself, pushed by {hardware} producers with little incentive to decelerate.

He pointed to Bitmain, which continues to provide mining rigs no matter market demand, due to its direct pipeline to chipmakers like TSMC. Even when miners aren’t shopping for, the firm can deploy the machines itself in areas with ultra-cheap electrical energy — from the U.S. to Pakistan — flooding the community with hash energy and driving up mining problem. That international footprint, coupled with low manufacturing prices, permits Bitmain to stay worthwhile whereas squeezing margins for everybody else.

Still, Terawulf is pivoting aggressively. Last week, it signed a $6.7 billion lease-backed deal with Google to transform a whole bunch of megawatts of mining infrastructure into information heart house.

“These things, as everyone can attest to up here, like electrical infrastructure, don’t move quickly,” Fleury stated. “Tech is used to moving quickly and breaking things, but these deals take an extremely long time to come together. It took us four to five months of very intense due diligence.”

“What I take the most pride in in that transaction was really working collectively with those partners to come up with a new mousetrap that I hope now becomes something that the industry can duplicate at other companies,” he stated. “Google is providing $3.2 billion of backstop lease obligation support to Terawulf, which effectively allows me to go out and secure financing at a really efficient cost of capital.”

Profitability—or Patience

Kent Draper, chief business officer at IREN, took a quieter however assured stance. His firm mines bitcoin profitably — even as we speak, he stated. Still, he pointed to at least one frequent denominator: energy.

“Being a low-cost producer is fundamentally important, and that’s how we’ve always focused our business — having control of our sites, having operational control, being in areas that are low-cost power jurisdictions,” Draper stated.

Iren, based on him, is presently working at 50 exahash, which interprets to a billion-dollar annual income run fee beneath present bitcoin market circumstances. He famous that the firm’s gross margins — income minus electrical energy prices — stand at 75%, and even after accounting for company overhead and SG&A bills, IREN maintains a 65% EBITDA margin, or roughly $650 million in annualized earnings.

Still, even IREN is pausing its enlargement in mining. “That’s really dictated just by the opportunity set that we see on the AI side today and the potential to really diversify the revenue streams within our business, rather than a fundamental view that bitcoin mining is no longer attractive,” Draper stated.

On the AI aspect, IREN is pursuing each co-location and cloud. “Capital intensity is very different,” Draper stated. “If you’re owning the GPUs on top of the data center infrastructure, that’s 3x the investment. On the cloud side, the payback periods tend to be a lot faster—typically around two years on the GPU investment alone.”

Holding bitcoin — and the Line

For Marathon Digital (MARA) CFO Salman Khan, survival is about agility. With a long time in the oil business, Khan sees a well-known sample: increase, bust, consolidation, and the fixed race to remain environment friendly.

“This reminds me of those trends in commodity-exposed cycle industries,” Khan stated. “There are some very wealthy families in the oil sector who made billions, and then there are others who have filed bankruptcies. You have to have a strong balance sheet to survive these cycles.”

Marathon holds bitcoin on its stability sheet — one thing Khan stated paid off. “We’re not a treasury company, we’re not Strategy, but we like to have that hedge if bitcoin price escalates.”

More not too long ago, Marathon introduced a majority stake in Exaion. “The angle that we have on the AI front is compute on the edge,” Khan stated. “We like sovereign compute, which allows people to control their data better at a closer location to them. We like the aspect of recurring revenues that come with that. We also like that there’s a software aspect to it, and also the platform aspect to it.”

Beyond bitcoin, behind the grid

Despite the totally different factors of view and methods, all of it comes down to at least one frequent issue: energy. Whether it was getting used to mine bitcoin, energy AI, or stability electrical grids, vitality — not hash fee — was the forex of the dialog.

“We curtail our energy consumption for 120 hours a year,” CleanSpark’s Schultz stated. “We can avoid about a third of our total energy costs. So being that flexible load matters.”

Cleanspark, he added, has spent the previous yr quietly locking up megawatts round the nation. “You mentioned Georgia,” Schultz stated. “We have 100 megawatts surrounding the Atlanta airport. That’s a prime example. We’ve been focused on being the valuable partner for some of these rural utilities to monetize stranded megawatts.”

Still about bitcoin — for now

Despite the rising give attention to AI, the panelists made it clear that bitcoin stays central to their companies — for now. When requested why mining firms nonetheless deserve investor consideration, the solutions pointed to scale, value effectivity, and the capability to climate volatility.

Fleury emphasised that Terawulf’s contracted energy capability may generate substantial money circulation, evaluating the economics to established information heart operators. Khan identified a disconnect between Marathon’s bitcoin holdings and its market valuation, suggesting that the core mining enterprise is being missed. Draper underscored IREN’s operational effectivity and low-cost footprint, citing latest efficiency metrics that positioned the firm forward of different public miners.

And whereas the future might embrace cloud infrastructure and edge compute, Schultz argued that bitcoin itself may nonetheless evolve into one thing bigger — a foundational layer for vitality methods. As he put it, the subsequent section will not be about hypothesis, however about bitcoin’s function in serving to stability energy networks.

Read extra: Bitcoin Mining Costs Soar as Hashrate Hits Records: TheMinerMag