Bitcoin mining is the cornerstone of the crypto industry and the crypto market. At its core, the profitability of mining comes down to a single, crucial metric — the cost of producing each bitcoin.
The importance of this cost becomes even greater when it comes to publicly traded Bitcoin mining companies, as it’s essentially what keeps them operational and ultimately profitable. In this report, CryptoSlate will focus on Marathon Digital and Riot Blockchain, two of the largest public Bitcoin miners.
Marathon Digital (MARA) and Riot Platforms (RIOT) are two of the largest public Bitcoin mining companies by market cap. Their operational capacity and financials offer important insights into the state of Bitcoin mining at its highest and most organized level.
While all public Bitcoin mining companies, including Marathon and Riot, provide data on their mining costs, there’s often more to the numbers they publish. Some companies use different accounting treatments for digital assets, which impacts their carrying value. Some companies have multiple mining sites across various geographical regions, each with different electricity prices and mining capacities.
To better understand the average cost to mine one bitcoin, CryptoSlate adopted an alternative approach — dividing the total costs of revenues for each company by the number of Bitcoins they produced. This method, albeit more speculative, promises a more telling reflection of actual mining costs.
Dividing the total costs of revenues by the number of Bitcoins produced provides a comprehensive view of the expenses incurred in the mining process. This approach goes beyond just the electricity or operational costs, including all direct and indirect costs associated with mining, such as equipment depreciation, maintenance, staffing, and administrative expenses.
By aggregating these costs, this method shows what it truly costs a company to mine each Bitcoin. It accurately reflects the economic reality, capturing the full spectrum of expenses that impact the bottom line. This helps us understand the efficiency and profitability of Bitcoin mining operations and is a valuable tool for analysts and investors seeking to understand mining companies’ financial health and operational efficacy.
Marathon Digital (MARA)
Marathon had a very successful 2023, expanding its operational capacity through acquisitions and new mining equipment. The company also announced that its acquisitions enabled it to decrease operational…