With the highly anticipated Bitcoin halving approaching, Cantor Fitzgerald has released its comprehensive pre-halving cost-per-coin analysis, offering valuable insights into the preparedness of various bitcoin miners for the economic adjustments post-halving.
Drawing upon the latest Q4 2023 results and significant industry developments from January to April 2024, Cantor’s analysis delves into the performance metrics of key players in the mining sector.
The surge in Bitcoin’s price from $40,000 to a record-breaking high of approximately $73,000 following Cantor’s previous report in January is highlighted. This remarkable upswing is largely attributed to the approval and success of newly introduced Bitcoin Spot ETFs. However, as the halving event approached, the mining sector witnessed a relative underperformance compared to the token itself. Investor attention and capital gradually shifted towards ETFs due to their direct exposure to Bitcoin’s price movements.
Cantor’s analysis introduces a comprehensive ‘all-in’ cost-per-coin metric, encompassing all operational expenses associated with mining a single Bitcoin, including electricity costs, hosting fees, and other cash outlays.
In Q4 2023, Bitdeer Technologies Group (NASDAQ: BTDR), Cipher Mining (NASDAQ: CIFR), and Hut 8 Corp (NASDAQ: HUT) emerged as the top performers in terms of unit economics. These miners demonstrated the ability to maintain low costs through efficient operations and strategic revenue streams, such as cloud hash and hosting services. Conversely, miners like Argo Blockchain PLC ADR (NASDAQ: ARBK), Riot Blockchain (NASDAQ: RIOT), and Bit Digital Inc (NASDAQ: BTBT) faced higher costs primarily due to operational inefficiencies or elevated energy expenses.
As the halving event approaches, miners’ cost-per-coin is expected to double if the network hash rate remains unchanged. Cantor’s “stress test” suggests that CleanSpark (NASDAQ: CLSK), Riot, and Cipher are likely to be the best-positioned miners immediately following the halving, owing to their efficient cost structures and robust operations. Conversely, Argo Blockchain, Stronghold Digital Mining Inc (NASDAQ: SDIG), and Marathon Digital (NASDAQ: MARA) may encounter challenges in maintaining profitability post-halving due to their high operational costs relative to the current Bitcoin price.
Highlighting Bitcoin miners as a strategic investment akin to a call option on Bitcoin, Cantor emphasizes the potential upside offered by low-cost access to newly issued tokens and opportunities for energy monetization. With operational enhancements since the previous bull run, investing in Bitcoin mining stocks could prove strategic for investors anticipating another market upswing, notwithstanding the halving’s anticipated impact on miner profitability.
Cantor’s all-in cost-per-coin model, factoring in both electricity costs and total other cash expenses related to mining a single Bitcoin, estimates the total cost at $17,696. In light of the impending halving, Cantor advises investors to prioritize miners with positive free cash flow capable of sustaining operations without requiring additional capital. This approach is deemed more resilient and profitable in the long run, particularly as these miners are better positioned to capitalize on the forthcoming Bitcoin bull run effectively.
