Key Takeaways
Bitcoin experienced a surge of over 130% in 2024, but most mining companies’ stocks ended the year with losses. The profitability of miners was affected 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, representing a surge of over 130%. However, only 7 out of 25 publicly listed Bitcoin mining firms reported positive returns, according to a report by Cointelegraph.
Among the gainers, Core Scientific (CORZQ) led 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) saw their stocks plummet by 84% and 74%, respectively. MARA Holdings (MARA) and Bitfarms (BITF) also experienced notable declines, with losses of 12% and 44%.
The difficulties encountered by miners in 2024 were largely attributed to the halving event in April, which reduced block rewards from 6.25 BTC to 3.125 BTC. This substantial reduction in revenues led to daily earnings dropping to $42 million by December 22, down from over $100 million in April, according to the report.
Mining difficulty increased by 50.7% in 2024, rising from 72.01 to 108.52. This reflects intensified competition and the need for higher computational power to mine new blocks.
Operational costs also rose significantly. According to a CoinShares report, the average cash cost to produce one Bitcoin reached approximately $55,950 in Q3, a 13% increase from $49,500 in Q2.
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 balance sheets by accumulating Bitcoin reserves.