Bitcoin Mining Faces a Challenging Market as Power Becomes the Real Currency
According to CoinDesk, the Bitcoin mining industry is undergoing a fundamental transformation, as highlighted by industry leaders at the SALT Conference in Jackson Hole. The traditional four-year halving cycle, which once dictated the boom-and-bust rhythm of mining companies, is losing its significance. Instead, the focus has shifted to securing cheap energy and diversifying infrastructure, with companies like Terawulf, IREN, Marathon, and Cleanspark expanding into AI and data center projects to stabilize their revenues.
Matt Schultz, CEO of Cleanspark, emphasized the shift in priorities: “We used to talk about hashrate. Now we talk about how to monetize megawatts.” Cleanspark currently operates 800 megawatts of energy infrastructure and has an additional 1.2 gigawatts in development. With 33 locations, the company is exploring ways to monetize electricity beyond Bitcoin mining, leveraging its increased flexibility.
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“The four-year cycle is effectively broken with the maturation of Bitcoin as a strategic asset, through the ETF and now the strategic treasury and the like,” said Schultz. “Adoption drives demand. If you read anything about the recent ETF, they have consumed infinitely more Bitcoin than has been generated so far this year.”
Patrick Fleury, CFO of Terawulf, described Bitcoin mining as an “incredibly difficult business.” He explained that at a power price of five cents per kilowatt-hour, mining a single Bitcoin currently costs around $60,000. With Bitcoin priced at $115,000, electricity alone consumes half the revenue, and after accounting for corporate and operational expenses, profit margins shrink rapidly. Fleury stressed that profitability depends almost entirely on access to extremely cheap electricity.
| Company | Key Figures | Strategy |
|---|---|---|
| Cleanspark | 800 MW in operation, 1.2 GW in development, 33 locations | Diversification into AI and data centers, monetizing electricity |
| Terawulf | $6.7 billion lease-backed deal with Google, $3.2 billion lease guarantee | Converting mining infrastructure to data center space |
| IREN | 50 Exahash, $1 billion annual revenue run rate, 75% gross margin, 65% EBITDA margin ($650 million) | Focus on low-cost power, expansion into AI co-location and cloud solutions |
| Marathon | Holds Bitcoin on balance sheet, recent majority stake in Exaion | Edge computing, recurring revenue, software and platform components |
Fleury also pointed out that hardware manufacturers like Bitmain continue to produce mining rigs regardless of market demand, thanks to their direct connection to chip manufacturers such as TSMC. This allows Bitmain to deploy devices in regions with extremely cheap electricity, increasing network hashrate and mining difficulty, which in turn squeezes margins for other miners.
Terawulf recently signed a $6.7 billion lease-backed deal with Google to convert hundreds of megawatts of mining infrastructure into data center space. Google is providing a $3.2 billion lease guarantee, enabling Terawulf to secure financing at efficient capital costs. Fleury noted that such infrastructure deals require extensive due diligence, taking four to five months to complete.
Kent Draper, Chief Commercial Officer at IREN, stated that his company remains profitable in Bitcoin mining, operating with 50 Exahash and achieving a $1 billion annual revenue run rate. IREN maintains a 75% gross margin and a 65% EBITDA margin, equating to approximately $650 million in annualized profit. However, IREN is pausing mining expansion to focus on AI opportunities, including co-location and cloud solutions, where capital intensity and payback periods differ significantly.
Salman Khan, CFO of Marathon Digital, compared the mining industry to cyclical commodity sectors like oil, emphasizing the need for a strong balance sheet to survive market cycles. Marathon holds Bitcoin on its balance sheet as a hedge and recently acquired a majority stake in Exaion, focusing on edge computing and recurring revenue streams.
“There are some very wealthy families in the oil sector who have made billions, and then there are others who have gone bankrupt. You need a strong balance sheet to survive these cycles,” said Khan.
All executives agreed that energy, not hashrate, is now the key currency. Cleanspark, for example, reduces its energy consumption for 120 hours per year, saving about one-third of its total energy costs. The company has secured 100 megawatts around Atlanta airport and aims to be a valuable partner for rural utilities by monetizing unused megawatts.
- Access to cheap energy is critical for mining profitability.
- Companies are diversifying into AI and data centers to stabilize revenues.
- Hardware manufacturers like Bitmain continue to increase network difficulty, impacting margins.
- Strong balance sheets and operational efficiency are essential for survival.
Despite growing interest in AI, Bitcoin remains central to these companies’ operations. The panelists highlighted scalability, cost efficiency, and resilience to volatility as reasons why mining companies still attract investor attention. Fleury noted that Terawulf’s contracted power capacity could generate significant cash flows, while Khan pointed out a disconnect between Marathon’s Bitcoin holdings and its market valuation. Draper emphasized IREN’s operational efficiency and cost structure, which place it ahead of other publicly listed miners.
Looking ahead, Schultz suggested that Bitcoin could evolve into a foundational layer for energy systems, supporting grid stabilization rather than merely serving as a speculative asset.
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Source: CoinDesk, “Bitcoin-Mining steht vor einem ‘unglaublich schwierigen’ Markt, da Strom zur echten Währung wird”
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