Bitcoin Miners See Gloomy Quarter Even With Trump on Their Side

Article content

“When Bitcoin started to rally in November, we didn’t see an immediate corresponding move to a much higher level of global hash but we are seeing that now,” Dobson said. Hash refers to an indicator of the amount of computing power used to mint the cryptocurrency.   

Article content

Growth in international mining operations, including those from Russia and China, have also intensified the competition, said Ethan Vera, chief operating officer at crypto mining services provider Luxor Technology. 

Article content

Tariffs on the machines, some of which are made in Malaysia, are set to see much higher levels. “If that goes up more, it will be very detrimental, return profiles and growth forecasts can be hindered from that,” Vera said. “With tariffs coming in, I think everyone outside the US will benefit from that.” 

Article content

The US-listed crypto miners are facing more uncertainty in terms of their expansion plans given the rising cost of machines and highly unpredictable tariff policy in the near future. The US miners also saw delays in shipment due to heavy inspection at the border early this year with the US Commerce Department’s blacklisting of the largest supplier, Beijing-based Bitmain’s artificial-intelligence affiliate Xiamen Sophgo Technologies Ltd., in January. 

Article content

Article content

“The management teams are hesitant to develop a multi-year strategy based on what tariffs look like today when they realize that three months from now we could have a very different conversation on what the tariffs would look like,” Dobson said. 

Article content

Bitcoin miners are also facing more difficulty in raising capital from the stock market, which has been the main source of financing for most of the public miners. The energy-intensive mining process requires large amounts of capital to purchase machines, build out data centers and pay electricity bills which can be in tens of millions of dollars. 

Article content

Public mining companies have used at-the-market offerings to raise billions of dollars but some of them are turning to debt instruments such as fixed-income securities or credit facilities for liquidity. MARA Holdings Inc., Riot and CleanSpark have issued convertible bonds with the latter two recently setting up and expanding credit facilities, respectively.  

Article content

“I think the big public companies don’t want to sell shares in the current market, this is an expensive way for them to raise capital, whereas the debit instruments are just lower-cost capital,” Vera said. 

Article content

Article content

Bitcoin miners have been dealing with another blow since last April. A code update cut the Bitcoin rewards, which has been the main revenue stream for miners, by 50%. Called the halving, the preprogrammed event is designed to maintain the hard cap of 21 million Bitcoin by reducing that supply every four years. 

Article content

While Trump promised to make every Bitcoin in the US, the miners have been mainly grappling with the side effects of his policies, with tariffs hiking the cost of mining rigs while spurring overseas mining operations, and a stock market selloff that has affected their ability to raise capital. 

Article content

“In terms of the tariffs, I don’t think Trump has Bitcoin mining as his number one priority to focus on,” Vera said. “The trade war, for him, is the most important thing.”  

Article content