According to analysts from financial services company Cantor Fitzgerald, if the price of Bitcoin (BTC) does not rise significantly after halving, the 11 largest listed Bitcoin mining companies may have difficulty profiting from mining.
Matthew Shultz, Chairman and Co-founder of US Bitcoin mining company CleanSpark, referenced Cantor Fitzgerald’s research on X platform last Friday (26th), which showed that several mining companies, including Marathon Digital, Riot Platforms, and Core Scientific, may face greater pressure after the halving of Bitcoin, as the Bitcoin obtained from their operations may not offset the 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 the current price of Bitcoin), with “all in per coin” costs of $62,276 and $60,360 per Bitcoin, respectively. Hut 8’s latest mining operations report, released on January 5th, stated that its total reserve of Bitcoin is 9,195 BTC, valued at $377 million at the current price.
Cantor Fitzgerald’s analysis of listed mining companies’ all in per coin costs, source: Matthew Shultz. Cantor’s “all in per coin” indicator refers to the total cost of producing one Bitcoin by Bitcoin miners, including electricity fees, hosting fees, and other cash expenses. Cantor analysts predict that the only companies that can remain profitable after halving, assuming an average Bitcoin price of $40,000 and no drastic changes in computing power, are Singapore mining company BitDeer and CleanSpark.
According to CoinMarketCap data, at the time of this article’s publication, there are only 83 days left until the Bitcoin mining reward halves.
Hedging Risks with Derivatives
While many experts believe that the reduction in supply is bullish for the price of Bitcoin in the long term, it also means that mining companies with high operating costs may be affected. Dan Rosen, Vice President of Derivatives at Bitcoin mining company Luxor, pointed out that miners typically employ strategies to hedge potential losses from Bitcoin price fluctuations.
In an interview with Cointelegraph, Rosen stated that strategies commonly used by miners include purchasing derivative financial products such as hash rate futures contracts and Bitcoin-related options to mitigate any potential volatility.
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Related report: “US mining company Core Scientific focuses on improving efficiency, may hedge if Bitcoin rises to $40,000”
