Rising Costs, Greater Sustainability, and Changing Power in Bitcoin Mining

Bitcoin Mining Turns into a Loss-Making Business for Small Operators

According to a detailed report by Futurezone, Bitcoin mining has become a loss-making venture for many small-scale miners. The energy costs now exceed the value of the coins they receive in return. This scenario, long feared by crypto insiders, has now become reality: the process of providing GPU computing power in exchange for Bitcoin rewards is no longer financially viable for many small miners.

Bitcoin mining is highly energy-intensive, requiring hundreds of complex mathematical equations to be solved on each GPU to produce a single Bitcoin. Since Bitcoin's inception in 2009, the financial outlay for energy was always lower than the value of the mined Bitcoin—until now. The fixed limit of 21 million Bitcoins, as coded into the cryptocurrency's rules, means that the rate of new coin creation has steadily decreased due to increasing competition and worsening economic conditions.

This is partly due to the so-called "halvings," which occur every four years and halve the reward for mined Bitcoins, meaning miners receive less Bitcoin for the same amount of work. Additionally, as more individuals and companies mine Bitcoin, the network automatically increases the difficulty, requiring more energy for the same result.

Current Bitcoin Price	Energy Cost (Small Miners)	Energy Cost (Large Players)	Energy Cost (Sep. Previous Year)
$96,000	$137,000	$82,000	$56,000

Currently, a Bitcoin is worth around $96,000, but small mining operations must spend about $137,000 on energy costs. In contrast, the largest players in the Bitcoin mining world only need to invest $82,000. For comparison, in September of the previous year, mining costs were significantly lower at $56,000.

The promise of equal participation in the Bitcoin ecosystem has not materialized. Now, 99% of all coins are held in the wallets of the wealthiest 8% of crypto owners, and 1% control over 90% of the volume. For small miners, Bitcoin has become an unprofitable energy drain, and the coins themselves benefit only a small number of "crypto oligarchs."

Small miners face unsustainable energy costs.
Large players maintain profitability due to scale.
Bitcoin's distribution is highly concentrated among a few holders.

Key Takeaway: The dream of decentralized, equal participation in Bitcoin mining is fading, with high energy costs and concentration of wealth making it unviable for small operators. (Source: Futurezone)

Riot Platforms Reports Record Revenue but Suffers Losses

BTC Echo reports that Bitcoin mining company Riot Platforms achieved a record revenue of over $160 million in the first quarter of the year, marking a 50% increase compared to the same period last year. CEO Jason Les stated, "We have achieved a new quarterly revenue record of $161.4 million this quarter."

Despite this record, Riot Platforms reported a loss of $296,000, a sharp decline from a net profit of $211,000 in the previous year's quarter—a drop of 240%. The company attributes this downturn to increased mining costs, which nearly doubled compared to the previous year. The main reasons cited are the April 2024 halving event and a 41% increase in the average global network hashrate.

Q1 Revenue	Q1 Net Result	Previous Year Q1 Net Result	Change in Network Hashrate
$161.4 million	-$296,000	$211,000	+41%

Riot Platforms' stock (RIOT) closed on May 1st with a 7.32% increase at $7.77 per share.

Record revenue does not guarantee profitability due to rising costs.
Halving events and increased network competition are key challenges.

Key Takeaway: Even large, publicly traded miners like Riot Platforms are struggling with profitability despite record revenues, mainly due to rising operational costs and network competition. (Source: BTC Echo)

Bitcoin Mining Sustainability Reaches New Highs—Will Tesla Reconsider?

According to Cryptodnes.bg, a new study from the University of Cambridge reveals that Bitcoin mining is now more sustainable than ever. The report states that 52.4% of the energy used for Bitcoin mining now comes from sustainable sources, a significant increase from just 37.6% in 2022.

This is particularly relevant because Tesla CEO Elon Musk had previously set a threshold: if Bitcoin mining surpassed 50% clean energy, Tesla would reconsider accepting Bitcoin payments. Although this threshold has now been exceeded, Tesla has not yet reinstated Bitcoin as a payment option for its vehicles.

Year	Share of Sustainable Energy	Nuclear Energy	Renewables (Wind, Hydro, etc.)	Natural Gas	Coal
2022	37.6%	-	-	-	-
2025	52.4%	9.8%	42.6%	38.2%	8.9%

The Cambridge study highlights a significant shift away from coal, with natural gas now accounting for 38.2% of Bitcoin's energy consumption and coal dropping to 8.9%. The connection between Tesla and Bitcoin dates back to early 2021, when Tesla briefly accepted Bitcoin payments before suspending them for environmental reasons.

Over half of Bitcoin mining energy now comes from sustainable sources.
Tesla has not yet resumed Bitcoin payments despite the improved energy mix.
Coal usage in Bitcoin mining has dropped significantly.

Key Takeaway: The sustainability of Bitcoin mining has improved dramatically, potentially meeting the criteria for Tesla to reconsider Bitcoin payments, though no action has been taken yet. (Source: Cryptodnes.bg)

US Commerce Secretary Sees "Incredible Opportunity" for Bitcoin

BTC Echo reports that Howard Lutnick, billionaire and current US Commerce Secretary, has invested hundreds of millions of dollars in Bitcoin. Lutnick has been involved with the cryptocurrency since 2017 and is now one of the most vocal Bitcoin advocates in the new US administration.

Lutnick is particularly fascinated by Bitcoin's absolute scarcity: "21 million, there will be no more." He began by investing small amounts, gradually increasing his exposure as he became more familiar with the Bitcoin ecosystem. During his campaign, former President Trump advocated for all unmined Bitcoin to be claimed by the US mining industry, a notion that is unrealistic given Bitcoin's decentralized nature. However, six of the ten largest publicly traded Bitcoin miners are already based in the US.

"The next generation of miners in America will be able to take their destiny into their own hands and control electricity costs, and that will boost Bitcoin mining in America," said Lutnick.

Lutnick's son, Brandon Lutnick, is set to become a key figure in the crypto industry, having taken over the management of Cantor Fitzgerald and launching the Bitcoin holding company "Twenty One Capital" with an initial capital of $3 billion. This company aims to compete directly with Michael Saylor's Strategy.

Howard Lutnick has invested hundreds of millions in Bitcoin.
Six of the ten largest public Bitcoin miners are US-based.
New US-based Bitcoin holding company launches with $3 billion capital.

Key Takeaway: The US government, through figures like Howard Lutnick, is increasingly optimistic about Bitcoin's future, with significant investments and new ventures aiming to capitalize on the next bull market. (Source: BTC Echo)

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