Jackson Gap, Wy. — Bitcoin miners have lengthy been outlined by the boom-and-bust rhythm of the four-year halving cycle. However the recreation has now modified, in line with among the trade’s most distinguished executives on the SALT convention in Jackson Gap earlier this week.
The rise of exchange-traded funds, surging demand for energy, and the prospect of synthetic intelligence (AI) reshaping infrastructure wants imply that miners should discover methods to diversify or danger being left behind.
“We used to return right here and discuss hash fee,” mentioned Matt Schultz, CEO of Cleanspark. “Now we’re speaking about the best way to monetize megawatts.”
For years, mining firms—which derived their principal income solely from mining bitcoin—lived and died by the four-year bitcoin halving cycle. Each cycle, rewards had been slashed in half, and miners scrambled to chop prices or scale as much as survive. However that rhythm, in line with these executives, now not defines the enterprise.
“The four-year cycle is successfully damaged with the maturation of bitcoin as a strategic asset, with the ETF and now the strategic treasury and whatnot,” Schultz mentioned. “The adoption is driving demand. In case you learn something about the latest ETF, they’ve consumed infinitely extra bitcoin than have been generated to this point this yr.”
Cleanspark, which now operates 800 megawatts of power infrastructure and has one other 1.2 gigawatts in growth, has begun turning its consideration past proof-of-work. “Our pace to market with the electrical energy has created alternatives such that now we are able to have a look at methods to monetize energy past simply bitcoin mining,” he mentioned. “With 33 places, we now have an incredible deal extra flexibility than we ever did earlier than.”
A brutal enterprise
Schultz is just not alone in calling the trade’s monumental shift in enterprise mannequin.
Patrick Fleury, CFO of Terawulf, echoed the sentiment and didn’t attempt to sugarcoat the revenue squeeze the miners are actually feeling.
“Bitcoin mining is an extremely tough enterprise,” he mentioned. He broke down the economics of bitcoin mining in easy phrases: with electrical energy priced at 5 cents per kilowatt hour, it at the moment prices round $60,000 to mine a single bitcoin. At a bitcoin value of $115,000, meaning half the income is consumed by energy alone. As soon as company bills and different working prices are factored in, the margins tighten rapidly. In his view, profitability in mining hinges nearly solely on securing ultra-low-cost energy.
For Fleury, the deeper downside isn’t simply energy prices — it’s the relentless enlargement of the community itself, pushed by {hardware} producers with little incentive to decelerate.
He pointed to Bitmain, which continues to supply mining rigs no matter market demand, because of its direct pipeline to chipmakers like TSMC. Even when miners aren’t shopping for, the corporate can deploy the machines itself in areas with ultra-cheap electrical energy — from the U.S. to Pakistan — flooding the community with hash energy and driving up mining problem. That world footprint, coupled with low manufacturing prices, permits Bitmain to stay worthwhile whereas squeezing margins for everybody else.
Nonetheless, Terawulf is pivoting aggressively. Final week, it signed a $6.7 billion lease-backed cope with Google to transform tons of of megawatts of mining infrastructure into information middle area.
“These items, as everybody can attest to up right here, like electrical infrastructure, don’t transfer rapidly,” Fleury mentioned. “Tech is used to transferring rapidly and breaking issues, however these offers take a particularly very long time to return collectively. It took us 4 to 5 months of very intense due diligence.”
“What I take essentially the most satisfaction in in that transaction was actually working collectively with these companions to provide you with a brand new mousetrap that I hope now turns into one thing that the trade can duplicate at different firms,” he mentioned. “Google is offering $3.2 billion of backstop lease obligation help to Terawulf, which successfully permits me to exit and safe financing at a very environment friendly value of capital.”
Profitability—or Persistence
Kent Draper, chief industrial officer at IREN, took a quieter however assured stance. His firm mines bitcoin profitably — even as we speak, he mentioned. Nonetheless, he pointed to 1 frequent denominator: energy.
“Being a low-cost producer is essentially essential, and that is how we have at all times targeted our enterprise — having management of our websites, having operational management, being in areas which are low-cost energy jurisdictions,” Draper mentioned.
Iren, in line with him, is at the moment working at 50 exahash, which interprets to a billion-dollar annual income run fee beneath present bitcoin market circumstances. He famous that the corporate’s gross margins — income minus electrical energy prices — stand at 75%, and even after accounting for company overhead and SG&A bills, IREN maintains a 65% EBITDA margin, or roughly $650 million in annualized earnings.
Nonetheless, even IREN is pausing its enlargement in mining. “That’s actually dictated simply by the chance set that we see on the AI aspect as we speak and the potential to essentially diversify the income streams inside our enterprise, relatively than a elementary view that bitcoin mining is now not engaging,” Draper mentioned.
On the AI aspect, IREN is pursuing each co-location and cloud. “Capital depth may be very completely different,” Draper mentioned. “In case you’re proudly owning the GPUs on prime of the info middle infrastructure, that’s 3x the funding. On the cloud aspect, the payback intervals are typically quite a bit sooner—usually round two years on the GPU funding alone.”
Holding bitcoin — and the Line
For Marathon Digital (MARA) CFO Salman Khan, survival is about agility. With a long time within the oil trade, Khan sees a well-known sample: increase, bust, consolidation, and the fixed race to remain environment friendly.
“This jogs my memory of these developments in commodity-exposed cycle industries,” Khan mentioned. “There are some very rich households within the oil sector who made billions, after which there are others who’ve filed bankruptcies. It’s important to have a powerful stability sheet to outlive these cycles.”
Marathon holds bitcoin on its stability sheet — one thing Khan mentioned paid off. “We’re not a treasury firm, we’re not Technique, however we prefer to have that hedge if bitcoin value escalates.”
Extra just lately, Marathon introduced a majority stake in Exaion. “The angle that we’ve got on the AI entrance is compute on the sting,” Khan mentioned. “We like sovereign compute, which permits individuals to regulate their information higher at a more in-depth location to them. We just like the side of recurring revenues that include that. We additionally like that there is a software program side to it, and in addition the platform side to it.”
Past bitcoin, behind the grid
Regardless of the completely different factors of view and methods, all of it comes down to 1 frequent issue: energy. Whether or not it was getting used to mine bitcoin, energy AI, or stability electrical grids, power — not hash fee — was the forex of the dialog.
“We curtail our power consumption for 120 hours a yr,” CleanSpark’s Schultz mentioned. “We will keep away from a few third of our complete power prices. So being that versatile load issues.”
Cleanspark, he added, has spent the previous yr quietly locking up megawatts across the nation. “You talked about Georgia,” Schultz mentioned. “We now have 100 megawatts surrounding the Atlanta airport. That’s a major instance. We’ve been targeted on being the dear associate for a few of these rural utilities to monetize stranded megawatts.”
Nonetheless about bitcoin — for now
Regardless of the rising give attention to AI, the panelists made it clear that bitcoin stays central to their companies — for now. When requested why mining firms nonetheless deserve investor consideration, the solutions pointed to scale, value effectivity, and the flexibility to climate volatility.
Fleury emphasised that Terawulf’s contracted energy capability may generate substantial money move, evaluating the economics to established information middle operators. Khan identified a disconnect between Marathon’s bitcoin holdings and its market valuation, suggesting that the core mining enterprise is being ignored. Draper underscored IREN’s operational effectivity and low-cost footprint, citing current efficiency metrics that positioned the corporate forward of different public miners.
And whereas the long run could embrace cloud infrastructure and edge compute, Schultz argued that bitcoin itself may nonetheless evolve into one thing bigger — a foundational layer for power methods. As he put it, the subsequent section is probably not about hypothesis, however about bitcoin’s function in serving to stability energy networks.
Learn extra: Bitcoin Mining Prices Soar as Hashrate Hits Information: TheMinerMag
