In Part 1, we discussed how access to capital is vital for Bitcoin miners to remain competitive and expand their hash rates. Capital-raising mechanisms such as At-the-Market (ATM) offerings, PIPE transactions, and convertible notes offer miners flexibility in securing funding while managing the risks of shareholder dilution. These financial tools play a crucial role in allowing miners to scale operations, particularly as mining becomes increasingly capital-intensive.

In this second part, we focus on how Bitcoin miners have effectively utilized these capital-raising tools to drive growth in their hash rate, market capitalization (MCAP), and overall shareholder value. Since June 30, 2022, several miners have achieved significant growth in these key areas by strategically issuing shares through ATMs, allowing them to raise the necessary funds for expansion. For instance, CleanSpark (CLSK) has increased its issued share capital by 501%, which has fueled a 971% increase in hash rate, from 2.8 EH/s to 30.0 EH/s. 

Importance of Hash Rate Growth for Bitcoin Miners

For North American Bitcoin miners, expanding hash rate in line with the global hash rate is essential to maintain competitiveness and secure a proportional share of Bitcoin block rewards. As the global Bitcoin network’s difficulty increases due to higher hash rates, miners must continuously upgrade and expand their operations to ensure they remain profitable. Failure to keep pace with global hash rate growth can lead to reduced revenue, diminished competitiveness, and an inability to cover operational costs. In extreme cases, this could jeopardize long-term business viability.

Growing hash rate also has strategic implications beyond day-to-day operations. A miner that continues to scale its hash rate can sustain or even increase its market share in the competitive mining industry, improving operational efficiency and maximizing potential revenue. Block rewards, which are tied to the Bitcoin mining process, become more challenging to obtain as more miners compete for a finite number of Bitcoin generated through mining. By growing hash rate in line with global network increases, miners can protect their profitability and ensure long-term sustainability in an increasingly difficult landscape.

Hash Rate Growth Since June 30, 2022

North American Bitcoin miners are facing heightened competition from international operations, particularly in regions with lower energy costs, including those that leverage renewable energy sources. In this competitive environment, expanding hash rate is critical for securing a dominant market position, attracting investors, and enhancing shareholder value. For miners, continuous hash rate growth ensures they can stay relevant in a fast-evolving industry, where both technology and energy consumption play pivotal roles in determining profitability.

The chart below highlights the hash rate growth of some leading public Bitcoin miners since June 2022, set against a 202% increase in the global Bitcoin hash rate. Several North American miners have outpaced this global growth by leveraging capital raised through ATMs and other mechanisms. For example, IREN (IREN) achieved a growth of 1,704% in hash rate by acquiring the latest Bitmain S21 Pro ASIC miners, reaching 21 EH/s as of September 30, 2024. Similarly, TeraWulf (WULF) has grown its hash rate by 1,011%, CleanSpark by 974%, Cipher Mining (CIFR) by 869%, Marathon Digital (MARA) by 846%, and Riot Platforms (RIOT) by 556%.

While these North American miners have made impressive gains, Canadian Bitcoin miners have encountered additional challenges when raising capital compared to their U.S. counterparts. Hive Digital (HIVE) and Bitfarms (BITF), two of the oldest publicly traded miners, have increased their hash rates by 174% and 212%, respectively, since June 30, 2022. Despite these slower growth rates, Canadian miners continue to lead in key operational metrics, demonstrating strong productivity over the past four years, with both Hive Digital and Bitfarms consistently ranked in the top 2, despite not achieving the same levels of capital growth as their U.S. peers.

Advantages and Disadvantages of Growing Hash Rate

Growing hash rate offers several advantages for Bitcoin miners. First and foremost, it ensures miners can maintain a proportional share of Bitcoin block rewards, which is essential for revenue generation. Additionally, higher hash rates enable miners to improve operational efficiency, which reduces the cost per Bitcoin mined. As mining difficulty increases, those with the most advanced and energy-efficient hardware will benefit from lower operating costs and increased profitability.

However, not keeping pace with global hash rate growth comes with significant disadvantages. Miners that fail to scale their hash rate risk losing their market share of block rewards, which could lead to lower earnings. This, in turn, can reduce a miner’s ability to invest in future expansion or cover ongoing operational costs, potentially leading to financial strain. In the long run, a stagnant hash rate can erode investor confidence and negatively impact the company’s stock performance, making it more difficult to raise capital in the future.

Market Capitalization Growth Since June 30, 2022

In addition to driving operational growth, capital raises have also significantly boosted the market capitalization (MCAP) of North American Bitcoin miners. By providing essential funds for scaling operations, these capital raises have allowed miners to invest in expanding their hash rate through the acquisition of state-of-the-art hardware and energy-efficient infrastructure. This, in turn, has improved both operational efficiency and competitiveness, driving revenues and profitability. Successful capital raises also signal investor confidence, which enhances market perception and attracts further investment.

For many miners, increased hash rate capacity leads to higher Bitcoin production, which directly impacts revenues. Higher production levels, when paired with efficient operations, drive profitability and support continued growth. Additionally, capital raises can improve a miner’s overall valuation, as investors are more likely to back companies with a strong growth trajectory. By aligning their capital-raising efforts with operational expansions, miners can strengthen their market position and drive MCAP growth over time.

CleanSpark, for example, has navigated market conditions skillfully in recent years. By making strategic hardware acquisitions and expanding its hash rate, the company has weathered the bear cycle and seen its market capitalization grow by 1,370% since June 30, 2022. CleanSpark hit an all-time high in share price in March 2024, which would have increased its MCAP by as much as 3,343% at that time. Other miners such as TeraWulf (1,256%), IREN (719%), and Marathon Holdings (600%) have also achieved substantial MCAP growth since June 2022.

Hash Rate Valuation 

The Enterprise Value (EV) divided by hash rate is a valuable valuation metric for Bitcoin miners because it links a miner's market value directly to its operational performance. EV reflects a company's total value, accounting for its market capitalization, debt, and cash, offering a comprehensive snapshot of its financial standing. By dividing EV by hash rate, investors can assess how efficiently a miner is utilizing its resources to generate Bitcoin.

As hash rate is a measure of computational power dedicated to mining, it is crucial for revenue generation. A higher hash rate increases the likelihood of earning Bitcoin block rewards. Therefore, the EV/hash rate ratio provides insight into how much market value is being generated per unit of mining capacity.

A lower EV/hash rate ratio suggests a more efficient or undervalued company, indicating that the miner is generating more computational power—and potentially more revenue—relative to its valuation. Conversely, a higher ratio could imply overvaluation or inefficiency.

This metric allows for comparison across Bitcoin mining companies of varying sizes, offering a more operationally grounded valuation than market capitalization alone. It helps investors evaluate how effectively miners are converting capital investments into productive mining power and, ultimately, revenue potential.

The table reveals that Riot Platforms' hash rate is currently valued at $37.4 million per EH/s, notably lower than peer miners such as Marathon Digital, CleanSpark, and IREN, whilst maintaining a robust balance sheet, with over $1.3 billion in cash and Bitcoin as of October 11, 2024.

Hive Digital has pursued a more organic growth strategy, opting not to heavily utilize ATM offerings or debt markets. Instead, they have focused on keeping costs low, especially general and administrative cost, using margins to expand hash rate and resulting in a valuation of $38.6 million per EH/s.

Meanwhile, TeraWulf and Cipher Mining, with valuations of $177 million and $123.9 million per EH/s respectively, have shifted their focus towards developing High-Performance Computing (HPC) businesses. This pivot may explain their recent valuation increases. Both companies have significant power and land assets, and if they secure contracts similar to Core Scientific's 12-year HPC hosting deal with CoreWeave, their higher valuations would be further justified.  

Conclusion

In conclusion, Bitcoin miners have effectively leveraged capital-raising tools, such as At-the-Market (ATM) offerings and PIPE transactions, to grow hash rate, market capitalization (MCAP), and shareholder value. Increasing hash rate is crucial for miners to stay competitive and maintain their share of Bitcoin block rewards as mining difficulty rises.

North American miners like CleanSpark, IREN, Riot Platforms and TeraWulf have significantly boosted their hash rates by raising funds through these mechanisms, strengthening their market positions and increasing MCAP. However, miners that fail to grow their hash rate in line with global trends risk losing revenue and competitiveness.

The Enterprise Value (EV) per hash rate ratio is a valuable metric for evaluating miner efficiency, linking operational performance to market value. Companies like TeraWulf and Cipher Mining are further exploring High-Performance Computing (HPC) ventures to justify higher valuations, while others like Hive Digital have focused on organic growth to maintain cost efficiency and profitability.