The Bitcoin network hashrate—the total computing power that secures the Bitcoin network—reached a new all-time high on September 1, surpassing 742 exahashes per second (EH/s).
According to CryptoQuant data, the hashrate has been steadily increasing since 2021, which makes sense given the ongoing shift to more powerful mining hardware such as application-specific integrated circuits (ASICs).
Hashrate of the Bitcoin network 2021-2024. Source: CryptoQuant.
As the network hashrate increases, so does the cost of mining Bitcoin, as miners are forced to upgrade to more powerful mining rigs, expand operations, and use more energy to remain competitive.
The mining industry faces economic difficulties
Increased hashrate and the corresponding high difficulty level continue to negatively impact miner revenues. August 2024 was the worst month for miner profitability since September 2023, with revenue falling to a low of $827.56 million.
Bitcoin Mining Difficulty 2021-2024 Source: CryptoQuant.
The financial problems facing miners were also documented in a recent report from JP Morgan, which showed that miners have seen revenue declines due to a variety of sources, including reduced block subsidies and increased electricity costs.
According to the report, of the five Bitcoin mining companies analyzed, MARA and Riot Platforms stood out as having the highest Bitcoin spending, at approximately $55,700 and $62,000, respectively.
These high costs and declining revenues are forcing mining companies to consider several options to increase revenue and stay in business. Many mining companies are moving from issuing corporate debt to offering equity to investors to avoid high debt-to-equity ratios.
Other mining companies are considering diversifying operations into artificial intelligence and high-performance computing to offset the shortfall in mining revenue, dedicating at least some of their computing power and physical capacity to data centers.
Renewable energy as an answer to cost recovery?
Companies like MARA, formerly Marathon Digital, are also exploring renewable energy to stay competitive in the challenging mining environment. MARA has experimented with landfill gas-to-energy systems that convert methane from landfills into usable energy.
The mining giant also signed a deal with the Kenyan government to develop renewable energy infrastructure in the country, a sign that the company may begin to source more energy from sustainable sources.
