Bitcoin Mining Returns to Profitability Post-Halving in June

Key Points

• Bitcoin mining profitability saw a positive shift in June, following the impact of the April halving.
• Several Bitcoin miners are strategically shifting towards high-performance computing (HPC) and AI hosting.

Bitcoin mining profitability saw a rise in June, following a challenging period in May. This change was noted in a recent report by investment bank Jefferies. The increase coincided with a 2% increase in Bitcoin’s price and a 5% decrease in network hashrate, indicating that the market is adapting to the effects of the April halving.

Analyst Jonathan Petersen stated in the Jefferies report that June was a month of modest recovery from the immediate impacts of the halving that were most pronounced in May.

Understanding Hashrate and Halving

Hashrate, a measure of the combined computational power dedicated to mining Bitcoin, serves as a proxy for competition within the industry and mining difficulty. The quadrennial halving event in April halved the rate at which new Bitcoins are generated, effectively reducing miners’ rewards by 50%.

Jefferies’ Adjustments on Bitcoin Miner Targets

Jefferies took the opportunity to adjust its price targets for several publicly traded Bitcoin mining companies. Marathon Digital (MARA), previously rated as “hold,” saw its target price decrease from $24 to $22. The bank also lowered its target for Argo Blockchain’s ADRs (ARBK) from $1.50 to $1.20, and for its UK-listed shares (ARB) from 11.90p to 9.5p (roughly 12 cents).

Jefferies maintained its “hold” rating for Argo Blockchain. It’s important to remember that one ADR is equivalent to 10 shares.

The report highlighted a noteworthy trend: several Bitcoin miners are pivoting towards high-performance computing (HPC) and artificial intelligence (AI) hosting. This strategic shift aims to diversify their revenue streams and capitalize on the growing demand for AI and cloud computing infrastructure.

Petersen explained in the report that this strategic shift has been driven by the declining profitability of bitcoin mining, particularly after the recent halving events.

US Mining Companies Gaining Share

Jefferies also noted that US-listed mining companies captured a larger share of newly minted Bitcoin in June compared to May. Their share increased from 19.1% to 20.8% of the total network production, likely due to the addition of new mining capacity and the network hashrate decline.

The report further reveals that Marathon Digital mined the most Bitcoin in June, at 590 tokens, despite a 4% decrease from May’s production. CleanSpark (CLSK) also saw a 7% increase, mining 445 tokens in June.

Marathon retained its position as the leader in installed hashrate among US-listed miners, boasting 31.5 exahashes per second (EH/s). Riot Platforms (RIOT) followed closely behind with 22 EH/s.

While Bitcoin mining profitability remains a concern, especially after the halving, June’s positive signs suggest the market is adjusting. The strategic shift towards HPC and AI hosting by some miners shows their efforts to diversify their revenue streams and adapt to the changing landscape.