Bitcoin Miner Financial Analysis: A Deep Dive into Profitability and Reserves

Bitcoin Miner Financial Analysis: A Deep Dive into Profitability and Reserves

Bitcoin miners operate on a seemingly simple financial equation: relying on fixed protocol revenue while facing fluctuating real-world expenses. When the market experiences turbulence, miners are among the first to feel the pressure on their balance sheets.

Key Takeaways:

• Decreasing Revenue: Miner 7-day average revenue has decreased by 35% in the last two months due to lower Bitcoin prices.
• Operating Costs: Electricity costs are the critical variable, with profitability influenced by equipment efficiency and mining location.
• Profitability Analysis: With current Bitcoin prices, many mining companies are struggling to break even, especially when accounting for non-cash expenses like depreciation.
• Reserves Strategies: More miners are choosing to hold their mined Bitcoin rather than selling immediately, indicating a long-term outlook.

A Detailed Look at Revenue and Costs

Bitcoin's revenue mechanism is fixed and encoded in the protocol. The mining reward per block is 3.125 Bitcoin, and approximately 144 blocks are generated daily, resulting in about 450 Bitcoin per day. This means global Bitcoin miners collectively mine 13,500 Bitcoin monthly. At a Bitcoin price of approximately $88,000, the total value amounts to around $1.2 billion. However, when distributing this revenue across a record-high 1078 EH/s hashrate, the revenue per TH/s is a mere 3.6 cents per day.

In terms of costs, electricity is the most critical variable. If modern mining machines like the S21 (17 joules per terahash) are used with cheap electricity, miners can still achieve cash profitability. However, if older equipment is used or they have to pay high electricity prices, every hash calculation increases costs. At current hashrate prices, an S19 miner might barely break even using electricity at $0.06 per kWh. Any increase in network difficulty, a drop in Bitcoin prices, or a rise in electricity prices would further exacerbate this situation.

Analyzing Operational Costs

In December 2024, CoinShares estimated that the cash cost of mining one Bitcoin in Q3 2024 was approximately $55,950. The University of Cambridge now estimates this cost at around $58,500. However, there are differences among miners. In Q3 2025, the average energy cost for Marathon Digital (MARA), the largest publicly traded Bitcoin mining company, was $39,235 per Bitcoin. Riot Platforms (RIOT), the second-largest publicly traded mining company, had a cost of $46,324. Despite Bitcoin's price being down 30% from its peak to $86,000, these companies are still profitable.

But this isn't the whole story. Miners also have to consider non-cash expenses, including depreciation, impairment, and stock option compensation. Once these costs are accounted for, the total cost of mining one Bitcoin can easily exceed $100,000.

Bitcoin Reserves

Leading mining companies like MARA are holding substantial Bitcoin reserves. This is because they have ancillary businesses and can access capital markets. However, many other mining companies may lose money as soon as network difficulty increases again. There are two parallel break-even scenarios in the mining industry: first, large industrial-scale mining companies with high-efficiency mining machines, cheap electricity, and light capital balance sheets. For them, daily cash flow will only turn negative if the Bitcoin price drops from $86,000 to $50,000. Currently, their cash profit is more than $40,000 per Bitcoin, but whether they achieve accounting profitability at current prices varies from miner to miner. Second, the rest of the miner group, who will find it difficult to maintain break-even once depreciation, impairment, and stock option expenses are factored in. Even conservative estimates of the combined cost per Bitcoin between $90,000 and $110,000 mean that many miners have exceeded the economic break-even point. They are able to continue mining because cash costs have not yet fallen below, but accounting costs have exceeded the limit. This may drive more miners to choose to hold Bitcoins rather than sell them now. As long as the cash flow remains positive, miners will continue to mine.

Conclusion

The system seems stable at a price level of $88,000, but this assumes that miners do not sell their Bitcoins. If the Bitcoin price drops further or miners are forced to liquidate their positions, they will approach the break-even line. Therefore, while stock price drops will continue to affect retail and trading groups, they are unlikely to hurt miners at the moment. However, if the financing channels for miners become more restricted, the situation may deteriorate, and then the growth flywheel will break and miners will have to increase their investment in ancillary businesses to maintain operations.