According to Matthew Sigel, head of digital asset research, without a constant influx of capital into new equipment, the share of miners in the global hashrate is decreasing, which leads to lower remuneration.
“We call this dynamic the melting ice problem. Historically, miners have relied on the stock market rather than debt financing to cover significant capital expenditures,” the experts explained.
The reasons for this are rooted in the nature of the mining business. The revenue of Bitcoin mining companies is difficult for lenders to assess, as the costs are directly tied to the fluctuating value of the first cryptocurrency. In addition, issuing shares to raise capital is generally more expensive than debt financing, according to VanEck.
In recent months, most mining companies have been trying to diversify their sources of revenue by using some of their energy capacity to support artificial intelligence and high-performance computing projects. This trend has intensified since the April 2024 halving, when the block reward was reduced to 3.125 BTC, significantly reducing the overall profitability of mining.
VanEck believes that the expansion of mining activities into the AI market does not pose a threat to the security of the Bitcoin network. Instead, the use of energy for AI operations contributes to the development of the first cryptocurrency’s ecosystem and makes the infrastructure more sustainable.
Earlier, experts from the investment bank Jefferies said that the profitability of Bitcoin mining had decreased by 7%. The reasons include a 2% drop in the price of the first cryptocurrency over the past month and a 9% increase in the network’s computing power.
