CoinShares: Riot, TeraWulf & CleanSpark – The Triple Threat Miners For The Bitcoin Halving

CoinShares forecasts the post-halving average production cost for crypto miners at $37,856 per Bitcoin.

Following the Bitcoin halving event in April, CoinShares analysis identifies Riot, TeraWulf, and CleanSpark as the most well-positioned Bitcoin mining firms to navigate expected significant cost increases.

Post-halving, CoinShares anticipates production costs to rise from around $16,800 to $27,900 and cash costs from $25,000 to $37,800 per Bitcoin in Q3 2023, projecting an average cost of production for crypto miners at $37,856.

The halving slashes the block reward by half, slowing Bitcoin creation in line with the network’s deflationary policy. The upcoming April 2024 halving will decrease the block reward to 3.125 BTC. Despite this, mining costs may persist or rise as miners expand operations for profitability.

According to CoinShares analysis, a post-halving Bitcoin price of $40,000 is crucial. Below this level, mining firms might deplete their financial reserves or operational buffers to sustain operations.

While Riot is well-positioned to handle the halving, its resilience faces challenges if the Bitcoin price drops below $40,000.

CoinShares highlights that despite miners enhancing fleet efficiency, the direct cost structure remains stagnant. This is due to the necessity of increasing power draw and energy consumption to mine the same quantity of Bitcoin.

CoinShares’ analysis reveals that electricity costs constitute approximately 68% pre-halving and 71% post-halving of miners’ total cost structure.

“The more rigs a miner has for self-mining, the larger the data centre needed on a megawatt basis. This large capital expenditure is either funded by cash, equity or debt, of which the latter can hurt miners’ all-in cost of production due to higher interest expense and put them at risk during Bitcoin downturns,” reads the analysis using Core Scientific as an example.

Striving for financial stability, Core Scientific concluded a $55-million oversubscribed equity financing round on January 8. Following the completion of bankruptcy proceedings, the mining company aims to re-list on Nasdaq.

* We hope this information will help you in your investment process, but this is not investment advice. Every investment carries risk, especially in this industry, so DYOR before making a decision.