Jackson Gap, Wy. — Bitcoin miners have lengthy been outlined by the boom-and-bust rhythm of the four-year halving cycle. However the sport has now modified, in keeping with a few of the business’s most outstanding 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 threat being left behind.
“We used to come back right here and discuss hash price,” mentioned Matt Schultz, CEO of Cleanspark. “Now we’re speaking about learn how to monetize megawatts.”
For years, mining corporations—which derived their most important 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 keeping with these executives, 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. Should 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 velocity to market with the electrical energy has created alternatives such that now we will have a look at methods to monetize energy past simply bitcoin mining,” he mentioned. “With 33 places, we now have an important deal extra flexibility than we ever did earlier than.”
A brutal enterprise
Schultz just isn’t alone in calling the business’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 simple phrases: with electrical energy priced at 5 cents per kilowatt hour, it at present prices round $60,000 to mine a single bitcoin. At a bitcoin worth 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 shortly. In his view, profitability in mining hinges nearly completely on securing ultra-low-cost energy.
For Fleury, the deeper drawback 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 provide mining rigs no matter market demand, due to 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 take care of Google to transform a whole lot of megawatts of mining infrastructure into knowledge heart house.
“These items, as everybody can attest to up right here, like electrical infrastructure, don’t transfer shortly,” Fleury mentioned. “Tech is used to transferring shortly and breaking issues, however these offers take a particularly very long time to come back collectively. It took us 4 to 5 months of very intense due diligence.”
“What I take essentially the most delight in in that transaction was actually working collectively with these companions to give you a brand new mousetrap that I hope now turns into one thing that the business can duplicate at different corporations,” he mentioned. “Google is offering $3.2 billion of backstop lease obligation assist to Terawulf, which successfully permits me to exit and safe financing at a very environment friendly price of capital.”
Profitability—or Endurance
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 at least one frequent denominator: energy.
“Being a low-cost producer is essentially necessary, and that is how we have at all times centered our enterprise — having management of our websites, having operational management, being in areas which might be low-cost energy jurisdictions,” Draper mentioned.
Iren, in keeping with him, is at present working at 50 exahash, which interprets to a billion-dollar annual income run price beneath present bitcoin market situations. 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 facet as we speak and the potential to essentially diversify the income streams inside our enterprise, reasonably than a basic view that bitcoin mining is not enticing,” Draper mentioned.
On the AI facet, IREN is pursuing each co-location and cloud. “Capital depth could be very completely different,” Draper mentioned. “Should you’re proudly owning the GPUs on prime of the information heart infrastructure, that’s 3x the funding. On the cloud facet, the payback durations are usually quite a bit quicker—sometimes 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 many years within the oil business, Khan sees a well-recognized 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 robust 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 wish to have that hedge if bitcoin worth escalates.”
Extra lately, Marathon introduced a majority stake in Exaion. “The angle that we now have on the AI entrance is compute on the sting,” Khan mentioned. “We like sovereign compute, which permits individuals to manage their knowledge higher at a more in-depth location to them. We just like the facet of recurring revenues that include that. We additionally like that there is a software program facet to it, and likewise the platform facet to it.”
Past bitcoin, behind the grid
Regardless of the completely different factors of view and methods, all of it comes down to at least one frequent issue: energy. Whether or not it was getting used to mine bitcoin, energy AI, or stability electrical grids, power — not hash price — was the forex of the dialog.
“We curtail our power consumption for 120 hours a yr,” CleanSpark’s Schultz mentioned. “We are able to keep away from a couple of third of our whole 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’ve got 100 megawatts surrounding the Atlanta airport. That’s a major instance. We’ve been centered on being the precious companion 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 corporations nonetheless deserve investor consideration, the solutions pointed to scale, price effectivity, and the flexibility to climate volatility.
Fleury emphasised that Terawulf’s contracted energy capability may generate substantial money movement, evaluating the economics to established knowledge heart operators. Khan identified a disconnect between Marathon’s bitcoin holdings and its market valuation, suggesting that the core mining enterprise is being neglected. Draper underscored IREN’s operational effectivity and low-cost footprint, citing latest efficiency metrics that positioned the corporate forward of different public miners.
And whereas the longer term might embody cloud infrastructure and edge compute, Schultz argued that bitcoin itself may nonetheless evolve into one thing bigger — a foundational layer for power techniques. As he put it, the subsequent section will not be about hypothesis, however about bitcoin’s function in serving to stability energy networks.
Learn extra: Bitcoin Mining Prices Soar as Hashrate Hits Data: TheMinerMag