Significant Bitcoin Correction
Bitcoin is experiencing its strongest correction in the current cycle. The drop from its all-time high is 25%. While retail investors feel nervous about unrealized losses, many miners face potential capitulation due to sharply reduced business profitability.
Current Mining Profitability
According to the F2Pool mining pool, only the latest S21 models are truly profitable at the current cryptocurrency price and electricity costs of $0.08 per kWh. Four other ASICs—S19, A14, and M56—are marginally profitable. All other machines should be shut down.
Public Mining Companies and Their Challenges
Public mining companies provide a third of the global hashrate. They often benefit from better energy rates but face high debt and regular loan payments. Therefore, their Bitcoin production costs vary widely.
Cantor Fitzgerald’s Cost Analysis
Earlier this year, Cantor Fitzgerald published the estimated cost of mining post-halving. Some companies confirmed these estimates. The analysis showed that three companies—Argo Blockchain, HUT8, and Bit Digital—are already operating at a loss. Stronghold Digital and Marathon Digital are on the edge of profitability.
Marathon Digital’s Strategy
Marathon Digital (MARA) is noteworthy. Last year, it became the leader in hashrate and holds the largest Bitcoin reserves. Unlike competitors, it continued accumulating Bitcoin. In May, MARA sold 390 BTC out of 616 BTC mined and halted sales in June, betting on a quick cryptocurrency price increase.
MARA’s Current Challenge
Now, MARA is trapped in a situation reminiscent of 2022. With low prices and high production costs, it may need to sell some reserves. MARA’s reserves total 18,536 BTC, valued at $1 billion.
Miners’ Impact on the Market
According to CryptoQuant, miners have contributed a net inflow of $118 billion to crypto exchanges over the past 18 months. They are the leading sellers in the market.
Future Pressure from Miners
Bitcoin’s decline and the need for cash to cover operating expenses will likely increase pressure from miners in the medium term.
