The Bitcoin sign is seen in the main hall during the Bitcoin 2024 conference at the Music City Center on July 26, 2024 in Nashville, Tennessee.
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It's been a week of extremes for me. Bitcoin enthusiasts
On the positive side, the cryptocurrency has surged 12% in the past seven days and the network’s hash rate has hit an all-time high. Hash rate refers to the collective computing power of all miners on the Bitcoin network, and the recent surge suggests that there have never been more miners online, actively securing the network.
Meanwhile, another key metric this week showed that it’s getting harder to make money in mining. Investment bank Jefferies wrote in a report that cryptocurrency mining was “significantly” less profitable in August. Average daily revenue per exahash, or income per miner, fell 11.8% from the previous month, Jefferies said.
As Bitcoin becomes more established, even a major part of the economy, the days of easy money appear to be over. Institutional capital has poured in since the SEC approved Bitcoin exchange-traded funds in January, and the Bitcoin network is more powerful than ever, powered by a vast, decentralized network of miners who secure transactions with the help of massive banks of machines.
But more people — and their powerful machines — are competing for smaller rewards.
In April, the Bitcoin code automatically halved new issuances of the world’s largest cryptocurrency, an event that occurs roughly every four years to create scarcity. The halving is historically preceded by a wave of bankruptcies among Bitcoin mining companies, which suddenly generate significantly less revenue for the same level of operating costs.
Bitcoin miners are being hit hard by Wall Street.
Digital Marathon It decreased by about 30% in 2024, while Riot platforms Bitcoin has fallen by 53% in value, while the price of Bitcoin has risen by about 44% this year.
Publicly traded North American miners minted a smaller share of new bitcoin in August than in July, falling to 19.9% of the total network, Jefferies said. These companies are still spending on upgrading equipment, which means efficiency is improving but the economy is getting worse.
Marathon CEO Fred Thiel told CNBC that thanks to the upgrade cycle, the machines are now able to hash twice as much as previous models with the same energy use.
“There is no need to add sites or power, just upgrade the systems,” Thiel said.
Riot CEO Jason Lis remains bullish on Bitcoin’s future despite the tough economic times. “Bitcoin is the most stable currency in the world,” he said, and “mining it at low cost is an effective way to gain exposure to it.”
Not all miners are feeling the financial pinch. Companies like Scientific nucleusBig tech companies, which emerged from bankruptcy in January, are finding ways to use their massive infrastructure to power artificial intelligence and high-performance computing.
Last month, Core announced an expanded $6.7 billion deal with CoreWeave, an Nvidia-backed startup that provides graphics processing units (GPUs) to the chipmaker to run AI models.
In a note this week, Bernstein pointed to Core Scientific as the best performing publicly traded Bitcoin miner, noting that among mining companies that have diversified into AI and high-performance computing, Core is “the only company with a physical localization contract with a leading GPU cloud provider.”
Core has more than doubled in value since its return to the stock market, and now has a market cap of nearly $3 billion.
“Our facilities are designed to be versatile not only for Bitcoin mining, but also for the shift we’re making now to high-performance computing,” Core CEO Adam Sullivan told CNBC.
If Core runs on all 700 megawatts of its AI and high-performance computing capacity, it would make the company the third-largest publicly traded data center company in the United States, Bernstein added.
“It’s really about the next three years in terms of the real opportunity to capture a significant share of the data center market,” Sullivan said. “Every major data center company has carved out a niche for themselves, but the niche that Bitcoin miners are now in is the largest niche that has ever existed in the data center industry.”
— CNBC's Talia Kaplan and Jordan Smith contributed to this report.
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