The Return of HODL Despite Bleak Q2 Margins
Pure-play miners going Microstrategy route
We are now entering the earnings season for the second quarter, with Riot Platforms being the first public mining company to disclose financial and operational data. Their report paints a picture of the harsh margins of bitcoin mining in the post-halving world, a scenario likely shared by many others set to release their earnings in the coming weeks.
Riot produced 845 BTC in Q2, generating a revenue of $55.8 million, implying an average revenue of $66k per BTC. According to TheMinerMag’s analysis, Riot’s direct cost of bitcoin production after power credits was $25.3k (It would be $41.7k before power credits). The corporate overhead for the mining segment was estimated to be $27.4k based on a revenue fair share approach.
In total, Riot’s all-in mining cost amounted to $52.7k per BTC in Q2, net of power credits. This means the mining segment, which comprises 78% of Riot’s total revenue, had a net profit of $11.2 million in Q2 for a fleet of over 15 EH/s.
Besides proprietary mining, Riot has an engineering segment and some residual revenues from the discontinued hosting business. Considering all factors, the company generated a profit of just $1.22 million, net of stock-based compensation, and before depreciation and tax.
This situation is due to the brutal impact of bitcoin’s halving and the sluggish hashprice. Normalizing bitcoin’s hashrate and block rewards using the hashcost metric compiled by TheMinerMag, we see that Riot managed to reduce its hashcosts compared to Q1 as it braced for the halving’s impact. However, despite these efforts, bitcoin mining isn’t generating much cash flow at the moment for Riot, and possibly many others, due to the low hashprice below $50/PH/s.
Interestingly, pure-play bitcoin mining companies like Riot and CleanSpark did not sell any bitcoin in Q2 to cover operating costs, despite the low hashprice and margin. Instead, they raised sufficient proceeds through stock offerings to fund both capital and operating expenditures. MARA did sell some of its mined bitcoin in Q2 but announced last month that it would return to the full HODL mode.
Their bet is on the long-term appreciation of bitcoin. Riot, Mara and CleanSpark alone were holding 34,461 BTC as of June 30.
Here is the schedule of upcoming Q2 earnings:
Marathon: Aug 1, 5:00 p.m. EDT
Northern Data: Aug 6, 3:00 p.m. Central European Summer Time
Core Scientific: Aug 7, 3:00 p.m. Central Time
Cipher: Aug 13, 8:00 a.m. EDT
Hut 8: Aug 13, 8:30 a.m. EDT
Regulation News
Russia to Legalize Crypto Mining Effective November - TheMinerMag
Hardware and Infrastructure News
Auradine Ships 3-nm Bitcoin ASIC Boasting 14 J/TH Efficiency - TheMinerMag
MicroBT Launches M6XS+ WhatsMiners with 17J/TH Efficiency - TheMinerMag
Mempool Launches Accelerator for Bitcoin Transactions - TheMinerMag
Bitcoin Mining Difficulty Sets New Record Above 90 Trillion - TheMinerMag
Corporate News
Riot Increases Stake in Bitfarms to 15.9% - TheMinerMag
Power Generator Greenidge Pivots to Retain Mined Bitcoin - TheMinerMag
Bitfarms Mined 34% More Bitcoin in July Amid Rising Difficulty - TheMinerMag
Financial News
Bitcoin Miner Argo Raises $8.35M via Stock Offerings - TheMinerMag
Feature
Bitcoin miners strike back on energy [at Bitcoin 2024]- Axios
Bitcoin Miners Weathering ‘Identity Crisis’ as Some Eye AI and Acquisitions - Decrypt
Hive Digital’s AI Play - The Mining Pod
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