Marathon Digital’s Bitcoin Buying Spree as Mining Difficulty Hits All-Time High

TLDR:

Bitcoin mining difficulty reached a record high, putting pressure on miners’ profit margins
Marathon Digital added over 5,000 BTC in a month, now holding 26,200 BTC worth $1.5 billion
Bitcoin miners’ revenue dropped to $828 million in August, the lowest in a year
Several major mining companies reported decreased Bitcoin production in August
Bitcoin’s price has risen 38% year-to-date despite challenges in the mining sector

Bitcoin mining difficulty has hit an all-time high, putting increased pressure on miners’ profit margins. This comes as major players in the industry, like Marathon Digital, continue to add to their Bitcoin holdings despite the challenging environment.

On Wednesday, mining difficulty increased by 3.5%, reaching a new record according to data from crypto-mining tracker CoinWarz. This metric reflects the computational power required to mine new Bitcoin and is often seen as an indicator of future price movements.

The rise in difficulty comes at a challenging time for miners, who are still grappling with the effects of April’s “halving” event. This programmed reduction in mining rewards has already cut potential revenues by half, contributing to a roughly 10% drop in Bitcoin’s price since then.

Despite these challenges, some mining companies are expanding their operations. Marathon Digital Holdings (MARA) added over 5,000 Bitcoin to its holdings in the last month, bringing its total to 26,200 BTC, valued at approximately $1.5 billion.

Acquiring #bitcoin is a marathon, not a sprint. pic.twitter.com/ZYuf1tq6cH

— MARA (@MarathonDH) September 12, 2024

This increase has secured MARA’s position as the world’s second-largest public company holder of Bitcoin, just behind MicroStrategy.

August revenues for Wall Street’s Bitcoin miners fell to $828 million, the lowest in a year. This marks a 57% drop from March’s peak, highlighting growing challenges in the mining sector.

Several major mining companies reported decreased Bitcoin production in August compared to the previous month. Argo Blockchain mined 38 Bitcoin, down from 48 in July. HIVE Digital Technologies mined 112 Bitcoin, 4 less than the 116 reported the previous month. CleanSpark and Bitfarms also reported declines in their Bitcoin production.

The mining industry’s struggles are reflected in the stock performance of major publicly traded mining companies. Shares of Marathon Digital Inc. and Riot Platforms Inc. have fallen 31% and 54% respectively this year.

Despite these challenges, Bitcoin’s price has shown resilience, rising 38% year-to-date and reaching a peak of $73,798 in March. The cryptocurrency was trading at around $58,000 on Thursday.

The hash rate, which measures the total computing power supporting the network, also hit an all-time high in September. This suggests that miners are betting on a significant price increase in the near future, despite the current challenges.

Industry experts note that if the current trends continue, some miners may struggle to remain cash flow positive. Christopher Bendiksen, Bitcoin research lead at CoinShares, stated,

“The effect of the all-time high in difficulty, right on the back of the halving earlier this year, is making the outlook extremely challenging for many miners — especially those at the higher end of the cost curve.”

Frank Holmes, Executive Chairman of HIVE, commented,

“We remain focused on our strategy of maintaining the lowest G&A expenses per Bitcoin mined, maximizing cash flow return on invested capital, and achieving high revenue per employee while minimizing share dilution.”