Key Takeaways
- Bitcoin surged over 130% in 2024, but the shares of most mining companies ended the year in the red.
- Rising operating costs, increased mining difficulty, and reduced block rewards since the halving have affected the profitability of miners.
Bitcoin has risen over 130% in 2024, from an initial price of $42,300 on January 1 to $98,600 as of December 24, 2024.
However, only 7 out of 25 publicly listed bitcoin mining companies delivered positive returns, according to a a report by Cointelegraph.
Core Scientific (CORZK) led the gainers with a 327% increase, followed by TeraWulf (VULF) with 169%, Bitdeer (BTDR) with 167% and Hut 8 (HUT) with 91%.
Cifra (CIFR), Iris Energi (IREN) and Northern Data (NB2) also posted positive returns.
In contrast, several mining firms had significant problems. Argo Blockchain (ARB) and Greenidge (GREE) saw shares drop 84% and 74%, respectively.
MARA Holdings (MARA) and Bitfarms (BITF) also faced significant declines, posting losses of 12% and 44%.
The challenges miners faced in 2024 were largely driven by the halving event in April, which reduced block rewards from 6.25 BTC to 3.125 BTC.
This has significantly reduced miners’ earnings, with daily earnings falling to $42 million by December 22, down from over $100 million in April, the report said.
Mining difficulty increased by 50.7% in 2024, from 72.01 to 108.52, reflecting increased competition and more computing power needed to mine new blocks.
Operating costs also rose significantly, with the average cash cost to produce one bitcoin reaching approximately $55,950 in the third quarter, up from $49,500 in the second quarter, a 13% increase, according to CoinShares report.
To mitigate these challenges, many mining companies have turned to capital markets for financial assistance.
Together, they have raised over $2.2 billion through equity offerings in 2024, including $1.25 billion in the second quarter from nine US-listed companies and an additional $530 million in the third quarter.
At the same time, companies such as MARA and Hut 8 have taken steps to strengthen their balance sheets by accumulating Bitcoin reserves.
