In 2024, bitcoin showed staggering growth, increasing in price by 130% from $42,300 to $98,600 by December 24. However, paradoxically, the significant increase in the value of cryptocurrencies has not led to equivalent success for most mining companies, which have been under pressure from rising costs and structural changes in the industry.
Mining sector: on the verge of survival
Despite the impressive growth of bitcoin, out of 25 publicly traded mining companies, only 7 ended the year with a profit. The leaders were Core Scientific (+327%), TeraWulf (+169%), Bitdeer (+167%) and Hut 8 (+91%). Cipher, Iris Energy and Northern Data also recorded positive dynamics.
However, the situation was less favorable for a number of companies. Argo Blockchain shares fell by 84%, Greenidge lost 74%, and MARA Holdings and Bitfarms declined by 12% and 44%, respectively.
Key factors of difficulties
The main challenges for miners in 2024 were:
Halving: In April, the reward for mining a bitcoin block decreased from 6.25 BTC to 3.125 BTC. This drastically reduced income: by December, daily earnings had dropped from $100 million to $42 million.
Increased mining difficulty: The difficulty index increased by 50.7%, reaching a record 108.52. This made it more difficult to mine new blocks and increased the need for expensive equipment.
Growth in operating expenses: The average cost of mining one bitcoin increased by 13% to $55,950 in the third quarter against $49,500 in the second.
Survival strategies
To cope with the pressure, many companies have resorted to additional financing. In 2024, more than $2.2 billion was raised, including $1.25 billion in the second quarter alone. Companies are also taking measures to optimize assets: MARA and Hut 8, for example, have been actively building up bitcoin reserves.
The Future of Mining: Challenges and Opportunities
The year 2024 was a test for the mining industry. The success of some companies, such as Core Scientific, shows that sound management and innovation can bring profits even under pressure. However, the general trend points to the need to review business models: increasing efficiency, diversifying income, and working to reduce costs are becoming key factors for survival.
The mining market is entering a new era where every step becomes crucial, and the stability of the sector largely depends on adapting to the changes dictated by the dynamics of cryptocurrencies and technology.
