Casual observers of Bitcoin miners’ Q4 earnings could be forgiven thinking it’s been nothing but smooth sailing for the industry.
But there’s no ignoring the fact that publicly traded Bitcoin miners lost $23 billion off their collective market capitalization in the past month, according to a recent JP Morgan report.
It’s not all that surprising given the price of Bitcoin began February above $102,000 and then sank as low as $78,000 while markets were tormented by President Donald Trump’s trade war talk.
Apart from hoping Bitcoin’s price goes up, stock analysts told Decrypt that they’re keeping an eye on data center deals, energy costs, and how miners are making their existing fleets more efficient.
At the start of the week, Hut 8 reported $162.4 million revenue for 2024—a 69% increase compared to 2023, the company said. But that’s not why Mike Colonnese, a managing director and senior crypto analyst at H.C. Wainwright, said he’s feeling optimistic about the firm.
“We think Hut 8 is close to signing a major HPC/AI deal with a hyperscaler,” he told Decrypt. “The company would build and operate an HPC/AI data center for a client in a colocation type of model where Hut would generate long-term high margin revenues from a tenant for managing the infrastructure in which that tenant’s GPUs are deployed to run AI workloads.”
To put a cherry on top, the company also noted in its report that it’s managed to slash its energy costs by 30%. That helped it create an 8 point increase in gross margin per Bitcoin mined, when comparing Q4 2024 to the previous year.
That’s no easy feat to pull off the same year the Bitcoin network underwent its fourth halving event and slashed the block reward paid to miners by half.
In general, Colonnese said he thinks mining costs will rise in 2025, as network difficulty continues to increase alongside growth in the network hash rate and there aren’t significant upgrades to the most popular mining rigs on the horizon.
“However, I expect BTC price appreciation to outpace growth in difficulty,” he added, “so miners should benefit from a significant improvement in mining economics in 2025.”
Nishant Sharma agrees it’s critical to watch how miners manage their overhead, but uses what he’s coined hashcost. It’s a calculation of the miners’ fleet efficiency and the money it takes to keep Bitcoin mining rigs running.
Sharma, formerly of Bitcoin mining rig behemoth Bitmain, is the founder of communications and research firm for the mining industry BlocksBridge Consulting.
“This provides a clearer picture of how cost-effectively the company mines Bitcoin,” he told Decrypt. “However, when assessing a mining company's stock, investors should look beyond just mining efficiency.”
He pointed out that most mining companies, like Hut 8, have already diversified their revenue streams by offering data center space to AI and high-performance computing (HPC) clients. But that’s not the only way forward.
Others, like Bitdeer, have been working to design their own ASIC chip. “These strategic moves introduce additional factors that investors must weigh based on their investment thesis and outlook,” he added.
An ASIC, or application-specific integrated circuit, is the all-important chip that optimizes hardware specifically for crypto mining. It’s what makes mining rigs head and shoulders more efficient than mining crypto with a personal computer.
But Bitdeer isn't the only one with new hardware on the horizon. Core Scientific announced in 2024 that it was teaming up with Jack Dorsey’s Block Inc. to design ASIC chips. Investors will get to see those chips in action soon enough.
“We do not expect to increase or refresh our Bitcoin mining fleet until we procure the new Block ASIC chips in the second half of 2025,” said Denise Sterling, Core Scientific’s chief financial officer, during the company’s earnings call last month.
To hear Max Shannon tell it, Core Scientfic’s earnings call was otherwise unremarkable. Shannon is an analyst at crypto investment firm CoinShares.
“On the mining front, performance was unimpressive and, in fact, slightly deteriorated,” he told Decrypt. “However, the high-performance computing (HPC) segment delivered strong results, with notable client interest.”
He was referring to Core Scientific’s deal with AI hyperscaler CoreWeave, which earlier this week announced a $1.7 billion acquisition deal. Just last month, the two companies finalized a $1.2 billion expansion at a Texas data center.
He said he’s also been keeping an eye on Bitdeer, another Bitcoin miner that’s dipping into the manufacturing side of things. Its SEALminer A2 rigs have already captured an estimated 5% of market share based on projected future hashrate growth, he said.
“We believe this could increase further over time,” Shannon said. “This segment offers greater operational flexibility, as the company can utilize machines at cost rather than purchasing at market prices, reducing expenditure.”
Editor's note: Story updated to correct BlocksBridge Consulting's name and for clarity
Edited by Guillermo Jimenez.