Key Takeaways
Bitcoin experienced a significant surge of over 130% in 2024, but most mining companies’ stocks ended the year with losses. The profitability of miners was impacted by rising operational costs, increased mining difficulty, and reduced block rewards resulting from the halving event.
Bitcoin’s price rose from $42,300 on January 1 to $98,600 on December 24, 2024, reflecting a surge of over 130% for the year. However, only 7 out of the 25 publicly listed Bitcoin mining firms reported positive returns, according to a report by Cointelegraph.
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 firms faced significant challenges. Argo Blockchain (ARB) and Greenidge (GREE) experienced a drastic decline in their stock prices, plummeting by 84% and 74% respectively. MARA Holdings (MARA) and Bitfarms (BITF) also suffered notable declines, recording losses of 12% and 44%.
The difficulties faced by miners in 2024 were mainly attributed to the halving event in April, which reduced block rewards from 6.25 BTC to 3.125 BTC. This substantial reduction in revenues caused daily earnings to drop to $42 million by December 22, down from over $100 million in April, as reported.
Mining difficulty increased by 50.7% in 2024, rising from 72.01 to 108.52. This increase reflects heightened competition and the need for higher computational power to mine new blocks.
Operational costs also saw a significant rise, with the average cash cost to produce one Bitcoin reaching approximately $55,950 in Q3, up by 13% from $49,500 in Q2, as stated in a report by CoinShares.
To address these challenges, many mining companies turned to capital markets for financial relief. In total, they raised over $2.2 billion through stock offerings in 2024, including $1.25 billion in Q2 from nine US-listed firms, and an additional $530 million in Q3.
At the same time, companies like MARA and Hut 8 took measures to strengthen their financial positions by accumulating Bitcoin reserves.
