- Bitcoin hashrate hits 900 Eh/s in late 2024, set to reach 1 Zh/s by July 2025 as miners diversify into AI and HPC for stable revenue.
- With Bitcoin mining costs soaring above $82K/BTC, miners like CleanSpark and Iren cut costs, while others shift to AI infrastructure.
- As mining returns shrink, listed miners pivot to AI hosting. Core Scientific and CIFR lead the way in building next-gen data centers.
The Bitcoin mining sector saw a massive boost in network hashrate in the last quarter of 2024 reaching 900 exahashes per second (Eh/s). Irregularities in this surge were traced to favorable political conditions and a rally in Bitcoin prices. Prediction analysts suggest it will hit the symbolic 1 zettahash per second (Zh/s) level by July 2025 with hashrate expected to hit 1.28 Zh/s by the end of the year.
On the other hand, valuation multiples of listed miners are compressing due to a growing belief that Bitcoin mining has reached the status of a zero-sum game. To ensure more stable revenue streams, some companies diversify into data center infrastructure and high-performance computing (HPC) hosting a larger share of the fixed reward pool when miners compete.
A key keeper of revenue for miners, the Bitcoin hash price has recovered modestly. However, structural forecasts point to the price falling in the $35 to $50 per petahash per day range for the rest of the halving cycle with a gradual decline.
Rising Costs and Profitability Metrics
For the listed miners, the average cash cost to produce one Bitcoin skyrocketed to around $82,162 in Q4 2024, a 47% hike over the last quarter. Without Hut 8, the average was $75,767. Despite the huge rise in costs, miners remained profitable for the most part because Bitcoin was trading around $82,000 at the time.
However, due to non-cash costs such stock-based compensation, total average production costs Bitcoin surged to $137,018. Such an improvement demonstrates the financial difficulties experienced by miners, including rapid hardware depreciation and constant reinvestment to keep up with the competition. Few companies, such as CleanSpark, Cormint, Iren, decreased the production costs through efficiency and strategic operational changes.
Strategic Shifts Toward AI Infrastructure
Higher revenue potential and investor interest motivate several mining companies to redirect resources towards AI infrastructure. This shift is being spearheaded by Core Scientific (CORZ) and Cipher Mining (CIFR). AIOrun has allocated 43 percent of its capacity to AI services and CIFR intends to devote 35 percent of its future capacity with funds of $50 million by SoftBank.
“Core Scientific has already developed a significant amount of AI infrastructure, with over 500 MW already in contract.” This move is part of an industry trend pointing towards diversified revenue streams beyond bitcoin mining and leveraging existing data center capabilities to address the booming demand for AI compute power.
Comparative Analysis with Traditional Mining Industries
However, there are differences in the underlying mechanics and economics of creating Bitcoin and gold. Gold mining works under relatively stable production predictions based on reserves and conventional long investment cycles. On the other hand, Bitcoin mining is highly competitive, has fast technological cycles and revenue streams that fluctuate with the network hashrate and price of Bitcoin.
Moreover, there is a difference in the environmental footprint of the two industries. Gold mining is often detrimental to the environment in the long term, but Bitcoin mining involves electricity, and is increasingly blending with electricity from renewable sources. The miners use otherwise stranded or wasted energy helping with grid stability and clean energy economics. Recordhash rates have also been limited by improvements in mining hardware’s efficiency and thus energy consumption.
