Bitcoin mining costs soar 47% to $137K in Q4 amid rising input costs, tax liabilities

The average cost to mine one Bitcoin (BTC) increased sharply in the fourth quarter of 2024, reaching $82,162 among publicly listed miners, representing a 47% quarterly increase, according to a recent  CoinShares industry report. 

The report pointed out that accelerated hardware deployment, tax expenses, and growing non-cash charges related to depreciation and stock-based compensation are the drivers behind this cost increase.

Excluding Hut 8, which recorded a substantial tax-related expense tied to unrealized gains, the average cash cost stood at $75,767. When including non-cash expenses, the average total production cost rose to $137,018 per Bitcoin. 

CoinShares attributed the higher input costs to faster hardware turnover and increased competition, compounded by fluctuating market prices and compressed valuation multiples across the sector.

Efficiency gains and cost reductions

Hut 8 reported the highest unit cost in the dataset due to a $93 million deferred tax liability and elevated interest expenses from convertible notes and credit facilities. As a result, its total per-Bitcoin cost exceeded $281,000 for the quarter. 

The company pledged 968 BTC to secure financing for 30,000 Antminer S21+ ASICs, aiming to expand its self-mining hash rate to 25.1 exahashes per second (EH/s) with a projected fleet efficiency of 16 joules per terahash (J/TH).

Across the sector, depreciation remains one of the most impactful expenses. Unlike traditional industries, where equipment depreciates due to physical use, ASICs depreciate because they become obsolete due to rapid technological advancements.

Miners must upgrade their machines frequently to maintain competitiveness, which accelerates non-cash write-downs and compresses margins.

Despite sector-wide inflation in mining costs, a small number of firms reduced their per-Bitcoin costs in the fourth quarter. 

CleanSpark cut all-in costs by 13% and cash costs by 15%, supported by a 56% increase in deployed hash rate, higher operational uptime (98%), and fleet efficiency improvements to 18 J/TH. 

Additionally, operating expenses such as SG&A and stock-based compensation declined. Iren cut electricity costs at its Childress facility by switching to spot pricing, which reduced per-Bitcoin electricity costs by 39% to $21,400. 

The company increased its operating hash rate from 12.2 to 22.6 EH/s in the fourth quarter and reported an average fleet efficiency of 15 J/TH. Cormint reduced total mining costs by 44% quarter over…