Bitcoin Halving Squeezes Miners, But Marathon, CleanSpark Stand Out: JPMorgan

Core Insights - Bitcoin miners faced significant challenges in Q2 2024 due to the fourth Bitcoin halving event, which halved their daily coin yields [1] - The halving resulted in a 28% sequential decline in total bitcoin mined, impacting margins and profitability across the sector [2] Company Performance - Marathon Digital Holdings Inc maintained its leadership by mining 2,056 bitcoins, while Riot Platforms Inc increased its hashrate significantly [2] - Marathon achieved the lowest cash SG&A cost per coin at $14,000, while Cipher Mining Inc had the lowest overall costs at $44,600 per coin; Riot recorded the highest operational costs at $62,000 per coin [3] - CleanSpark and Riot are expanding aggressively by acquiring facilities to enhance their hashrates and power capacity [4] Capital Market Activities - Miners raised over $1.2 billion through at-the-market offerings in Q2 2024, with Marathon and Iris Energy leading by raising $345 million and $457 million, respectively [6] - The total capital deployed by miners reached $720 million, reflecting a 165% year-over-year increase [6] Cost and Margin Analysis - Power expenses reached $1.8 billion, leading to a drop in gross margins from 58% in Q1 2024 to 44% [7] - Despite increased costs, CleanSpark and Cipher maintain a favorable position due to their cost efficiencies [7] Strategic Outlook - The leading players' strategic diversification and cost management may provide a competitive edge in a challenging environment as they navigate halved revenues and rising operational costs [8]