Key takeaways
- Bitcoin surged more than 130% in 2024, but shares of most mining companies ended the year in the red.
- Increased operational costs, increased mining difficulty, and reduced block rewards following the halving event have impacted miner profitability.
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Bitcoin surged more than 130% in 2024, from the year’s opening price of $42,300 on January 1 to $98,600 on December 24, 2024.
However, according to a report by Cointelegraph, only 7 out of 25 publicly traded Bitcoin mining companies generated positive returns.
Core Scientific (CORZQ) led the gainers with a 327% increase, followed by TeraWulf (WULF) at 169%, Bitdeer (BTDR) at 167%, and Hut 8 (HUT) at 91%.
Cipher (CIFR), Iris Energy (IREN) and Northern Data (NB2) also posted positive returns.
On the other hand, several mining companies have experienced considerable difficulties. Argo Blockchain (ARB) and Greenidge (GREE) saw their shares fall 84% and 74%, respectively.
MARA Holdings (MARA) and Bitfarms (BITF) also saw notable declines, posting losses of 12% and 44%.
The challenges miners faced in 2024 were largely due to the April halving event, which reduced block rewards from 6.25 BTC to 3.125 BTC.
This has significantly reduced miners’ earnings, with daily earnings falling to $42 million as of Dec. 22, from more than $100 million in April, according to the report.
Mining difficulty increased by 50.7% in 2024, from 72.01 to 108.52, reflecting increased competition and higher computing power needed to mine new blocks.
Operational costs have also increased significantly, with the average cost to produce one Bitcoin reaching around $55,950 in the third quarter, up from $49,500 in the second quarter, an increase of 13%, according to a report from CoinShares.
To alleviate these difficulties, many mining companies have turned to capital markets for financial assistance.
Collectively, they have raised more than $2.2 billion through equity offerings in 2024, including $1.25 billion in the second quarter from nine U.S.-listed companies and another $530 million in the third. quarter.
At the same time, companies like MARA and Hut 8 have taken steps to strengthen their balance sheets by accumulating Bitcoin reserves.
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