Bitcoin’s hashrate continues to surge, with mining difficulty set to increase for the fifth consecutive time. Publicly traded bitcoin (BTC) miners are nearing a major milestone, approaching a combined market cap of $40 billion, according to data from Farside. This represents a dramatic doubling in value over the past seven months, as Bitcoin’s price has soared through multiple record highs and nears the $100,000 mark for the first time.
However, miners are facing a significant challenge: revenue. The reward for confirming blocks on the Bitcoin blockchain was halved in April, reducing the miners’ earnings at a time when their combined market cap was around $20 billion. In the current cycle, only 450 bitcoins are mined per day, and the fees miners receive for their efforts have fallen to cycle lows, with just 10 BTC ($946,000) in fees recorded on November 27, according to Glassnode data. This leaves miners with two options: diversify their revenue streams or mine bitcoin at a lower cost than its current spot price of approximately $96,000.
Unfortunately, this situation is set to become even more challenging. Bitcoin’s mining difficulty, which determines how hard it is to mine each new block, is expected to rise by 3% in the coming days. Mining difficulty adjusts automatically every 2016 blocks (about every two weeks) and has been steadily climbing, currently well above the 1 trillion mark. A higher difficulty means that it takes more computational power — and therefore, more cost — for miners to successfully produce new blocks.
This increase in difficulty comes in the wake of Bitcoin’s soaring hashrate, which has remained above 700 exahash per second (EH/s) for over a month. As of November 27, the seven-day moving average of the hashrate stood at 726 EH/s, continuing to set higher highs and lows since mid-year, according to Glassnode data.
To cope with these pressures, many miners have diversified into other industries. In 2024, there has been a significant shift toward high-performance computing (HPC) and artificial intelligence (AI) hosting, areas where demand for computing power is exploding. For example, IREN (IREN) saw a 30% surge in its shares on Wednesday due to renewed interest in AI.
Other companies, such as Marathon Digital Holdings (MARA), have increased their bitcoin holdings as a strategic move. As of November 27, MARA added 703 BTC to its balance sheet by selling a zero-percent $1 billion convertible note to raise funds. The company now holds a total of 34,794 BTC.
The CoinShares Valkyrie Bitcoin Miners ETF, which tracks publicly traded miners, has seen its share price rise 60% year-to-date. However, it has underperformed Bitcoin itself, which has risen 113% over the same period.
