Bitcoin mining companies may face new changes as halving is approaching

The hottest month of September is here and the Mid-Autumn Festival is approaching.

September is often the most watched month for the evolving Bitcoin mining market, as many Bitcoin mining companies release their semi-annual or quarterly performance reports this month. On the other hand, mining has become a relatively mature industry now, and the acceleration of the much-anticipated Bitcoin halving in 2024 may trigger a new round of market demand. Many mining giants have begun to "low-key" increase their investment in this field to prepare for the upcoming "halving cycle."

In preparation for the “halving”, how have Bitcoin mining companies performed recently?

After experiencing the hardships and cold weather of the cryptocurrency market in the second quarter, the Bitcoin mining industry seems to have recovered. The increasingly mature experience accumulated by many listed companies and the resource advantages of the blockchain industry that have been deeply cultivated for many years are also gradually warming up the market. They have also begun to prepare step by step for the upcoming Bitcoin halving.

Overall, Bitcoin (BTC) miners have entered the accumulation stage. The miner reserve indicator shows a significant accumulation trend since May 27, 2023. Since Bitcoin recently fell from the $30,000 price level, the BTC reserves of mining companies have increased. On the other hand, Bitkoala Koala Finance found that many Bitcoin mining companies have also begun to actively raise funds before the "halving" to accumulate strength for the subsequent potential market growth. According to data compiled by TheMinerMag last month, 12 listed mining companies including Marathon Digital and Riot Platforms raised about $440 million through stock sales in the second quarter, an increase of nearly 60% over the previous three months. Some mining companies are diluting shareholders' equity to fight for their own interests. For example, the annualized dilution of common shareholders of Cleanspark and Terawulf since January 2022 is 116% and 67%, respectively.

So to put it simply, if we use four words to describe the current Bitcoin mining market, the most appropriate one may be: accumulation of strength for a sudden explosion.

Facing new changes, what will be the next fire for Bitcoin mining companies?

In fact, with the recent breakthroughs in domestic chip technology, traditional Bitcoin mining companies including Bitmain, Shenma and Canaan Creative have announced the launch of their own mining business and increased the production of mining machines. If the subsequent market gradually improves, sufficient mining machines should be put on the market. You will find that the Bitcoin mining industry has actually smoothly passed the production gap of the "chip shortage", and the timing of entry at this time is also very well grasped. With sufficient funds and resource allocation, all these latecomer advantages will further enhance the market competitiveness of the Bitcoin mining industry and may even change the mining industry landscape.

In the long run, Bitcoin mining companies that manufacture mining machines are always at the top of the "food chain" of the entire digital currency industry, and their status is crucial. In the long-term computing power layout, Bitcoin mining companies will not only obtain stable self-produced mining machines, but also be in a relatively advantageous position in external cooperation. From this perspective, for today's Bitcoin mining market (and even in the broader smartphone and automobile markets), Bitcoin mining companies need to grasp the key "key" of the entire mining industry chain, that is, the core of mining machine manufacturing including chips.

Moreover, looking at the current Bitcoin mining industry, the ones who can really gain a foothold are basically the mining companies that have completed the layout of the entire mining industry chain, from chip manufacturing, mining machine production to mining pools, mining farms, terminal wallets, etc. Generally speaking, mining belongs to the upstream of the cryptocurrency industry, and its technical support usually does not decline due to market turmoil, but the entry cost of this field is also high, requiring greater capital and resource investment. Therefore, only the most powerful "players" are qualified to enter the full industry chain layout, and this is precisely the "next fire" that Bitcoin mining companies need to ignite.

It is important to note that the cryptocurrency community is growing and market demand is rising. Although the price of Bitcoin has remained in the $25,000 range recently, it has great potential in the future. All of this is attracting more and more miners to jointly maintain network stability. In this context, the role played by Bitcoin mining companies is becoming more and more critical. Naturally, under this positive cycle of economic operation logic, miners' mining profits are bound to increase, which will then drive the vigorous development of the entire mining market.

Summarize

By analyzing the BTC mining information in the financial reports of Bitcoin mining companies, it seems that they have begun to plan for the next bull market. More importantly, people’s trust in blockchain and crypto mining companies has also begun to gradually recover. These larger mining companies have performed better in compliance, security and transparency. These are all "positive factors" that will drive the next wave of growth.

It is worth mentioning that Cambridge University recently revised the calculation method of the Bitcoin Electricity Consumption Index. This is also the first major update to the indicator since 2019. A week after the revision of the Cambridge Bitcoin Electricity Consumption Index method, JPMorgan Chase lowered its estimate of Bitcoin production costs from US$21,000 to US$18,000. Analysts said that "with the new method, the current Bitcoin production cost has dropped to around US$18,000, while with the old method, it is US$21,000. At present, every one cent change in electricity costs will result in a change of US$38,00 in Bitcoin production costs, which is undoubtedly another big positive for the Bitcoin mining market.

In short, stimulated by the expectation of “halving”, more Bitcoin mining companies are expected to enter the mining market, and a new mining landscape is likely to emerge. Are you ready?