- Bitcoin’s cost of production is around $53,000, while halving could nearly double electricity and production costs reshaping the mining industry.
- AI is gaining traction in Bitcoin mining as a diversification strategy and some companies report 3% or more of revenue from AI-related operations.
- Bitcoin’s hash rate could hit 700 Exahash by 2025 and might drop by 10% as miners turn off unprofitable ASICs to reduce costs.
Bitcoin’s potential to reach new heights continues to captivate investors, and analysts like Moustache have set their sights on the $80,000-$85,000 range. Moustache has been emphasizing this target since 2022. While this interim goal represents a significant achievement, Bitcoin’s upward trajectory could extend beyond this point, illustrating its inherent volatility and appeal to investors.
Elsewhere, CoinShares, a cryptocurrency research firm, published a recent report detailing the state of the Bitcoin mining industry in light of the upcoming 2024 Bitcoin halving. The average production cost for Bitcoin among listed mining companies is approximately $53,000. This cost structure is likely to shift with the halving, as miners adjust to a landscape where electricity and production costs are expected to nearly double.
The report predicts that the hash rate could rise to 700 Exahash by 2025, but after the halving, there could be a decline of up to 10% as miners turn off unprofitable ASICs. Hash prices, post-2024 halving, are projected to fall to $53/Ph/day. Miners are exploring cost-mitigation strategies such as optimizing energy costs, increasing mining efficiency, and securing favorable hardware procurement terms.
As Bitcoin mining becomes more expensive, some mining companies are shifting their focus to AI computing, which requires energy-secure locations and a different infrastructure setup. While AI poses unique challenges due to higher uptime demands and more complex redundancy systems, it has potential revenue advantages. Companies like Hive and Hut 8 are already reporting a portion of their revenue from AI activities, signaling a shift towards diversification in the industry.
Bitcoin mining could become concentrated in energy-insecure locations, allowing AI operations to take root in more stable energy environments. This trend might lead to increased competition among miners and a broader range of strategic investments to maintain profitability.
Miners are also taking steps to manage financial liabilities by using excess cash to reduce debt. Overall, the trend towards AI computing represents both an opportunity and a challenge for the Bitcoin mining industry, indicating a need for flexibility and innovation as the sector evolves.
