Bitcoin Halving Squeezes Miners, But Marathon, CleanSpark Stand Out: JPMorgan

Zinger Key Points

Marathon Digital leads in mining with the lowest SG&A costs, while Cipher Mining excels in overall cost efficiency.
Riot and CleanSpark expand aggressively, while capital-constrained Iris and Cipher focus on greenfield projects and cost management.
Discover Fast-Growing Stocks Every Month

Bitcoin miners faced a challenging second quarter of 2024, navigating the fourth Bitcoin BTC/USD halving event that slashed their daily coin yields in half.

The halving led to lower margins and profitability across the sector, with total bitcoin mined down 28% sequentially, according to a recent report by JPMorgan analyst Reginald L. Smith. Despite the tougher landscape, Marathon Digital Holdings Inc MARA maintained its lead, mining 2,056 bitcoins, while Riot Platforms Inc RIOT ramped up its hashrate the most.

Marathon Digital: Cost-Cutting Champion

Marathon leveraged its scale to achieve the industry’s lowest cash SG&A cost per coin, coming in at just $14,000.

Meanwhile, Cipher Mining Inc CIFR boasted the lowest overall costs at $44,600 per coin.

In contrast, Riot recorded the highest operational costs at $62,000 per coin, despite benefiting from favorable power contracts, Smith noted.

CleanSpark, Riot: Expansion Vs. Efficiency

Cash-rich players like Riot and CleanSpark Inc CLSK expanded aggressively, acquiring turn-key facilities to boost their hashrates and power capacity.

Meanwhile, capital-constrained firms like Iris Energy Ltd IREN and Cipher focused on greenfield projects requiring less immediate investment. Notably, Iris remains the only miner in the group operating high-performance computing (HPC) GPUs, positioning itself uniquely as others, including Cipher and CleanSpark, cautiously explore this potential revenue stream, according to JPMorgan.

Marathon, Iris Energy: Big Spenders In Capital Markets

The report also highlighted the miners' capital moves, with over $1.2 billion raised via at-the-market (ATM) offerings in Q2 2024.

Marathon and Iris Energy led the pack, raising $345 million and $457 million, respectively. Collectively, the miners deployed $720 million in capital, marking a 165% year-over-year increase, that analyst noted.

CleanSpark, Cipher: Margins Under Pressure

Despite increased costs, power expenses alone reached $1.8 billion, and gross margins dropped to 44% from 58% in Q1 2024. Yet, CleanSpark and Cipher continue to hold a favorable position due to their cost efficiencies.

As the year progresses, Marathon and Iris are expected to add significant hashrate, which could reshape the landscape further.

While the sector grapples with halved revenues and increased operational costs, the leading players’ strategic diversification and cost management might give them an edge in a competitive environment.

Read Next: