Major mining pubcos. have come out of crypto winter, at least for now
All-in cost of mining reduced by 10-20%
Bitcoin’s transaction fees have taken the spotlight over the past week thanks to the BRC-20 activities. The total block fees from January to May thus far have surpassed that in the entire year of 2022.
The recent block fee surge pushed bitcoin’s hashprice close to $130 PH/s but it has since then declined to $80/PH/s. Nevertheless, it looks like mining companies have come out of the 2022 crypto winter. Four of the five largest public bitcoin mining operations in North America by production have released Q1’23 reports this week and the numbers are up again.
Per TheMinerMag’s summary below, the average mining gross margin of Cipher, CleanSpark, Marathon and Riot has gone up to 50% in Q1, much higher than that in Q3’22 and Q4’22. In addition, their total equity financing and net spending on property, plant and equipment continued to increase, suggesting growing interest in expansion without taking leverage.
While bitcoin’s price bounce certainly helped in Q1, large mining pubcos have managed to reduce the all-in cost of mining by 10-20%, which included the cost of bitcoin production, corporate overhead and financial expenses, if any. Here are more detailed breakdowns of the all-in mining costs by individual companies.
The average all-in cost of mining of the four companies above in Q1 was about $18K. If that remains steady into the next halving due in less than a year, it would need bitcoin’s price to stay above $36K for these pubcos to generate positive earnings before tax, depreciation and amortization. Hence operational efficiency continues to be the key differentiating factor as we inch closer to the next bitcoin halving.
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