The month of August proved to be another challenging one for the North American Bitcoin miners, with mining difficulty increasing by a further 6.3%, achieving an all time high, and with the Bitcoin price falling by 11.3%, both metrics would result in miners being less profitable than in July.
Power Sales and Energy Response Credits
The hot weather of August caused a significant amount of curtailment of energy, causing some Bitcoin miners to adapt their strategies to challenging conditions.
A number of Texas based Bitcoin miners were able to implement energy strategies that benefited from the curtailment, including selling purchased power back to the grid, and earning demand response credits for being part of the Electric Reliability Council of Texas, Inc. (“ERCOT”) ancillary services program, thereby helping deliver power to 25 million customers and ensuring system reliability and open access to power transmission.
Grayscale’s victory in spot Bitcoin ETF case
Bitcoin ETFs have already received approval around the world, in Canada, Brazil and Dubai and US cryptocurrency and asset management industries have been trying for a number of years to convince the Securities and Exchange Commission (SEC) to approve a spot Bitcoin ETF, outlining that it would allow investors to gain exposure to Bitcoin, the world’s largest cryptocurrency, without having to own it. The SEC’s argument against approval was the worry that a spot Bitcoin Exchange-Traded Fund (ETF) will be vulnerable to manipulation.
On August 29, 2023 the United States (U.S.) District of Columbia Court of Appeals released a landmark ruling which stated that the SEC was wrong to reject an application from crypto asset manager Grayscale Investments to list an exchange-traded fund that tracks the price of Bitcoin.
A Grayscale spokeswoman said the decision "is a monumental step forward for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper."
Argo Blockchain (ARB.L, ARBK)
During the month of August Argo Blockchain mined 105 Bitcoin at a rate of 3.4 BTC per day, a reduction of 17.1% of the daily rate achieved in July, achieving $2.93 million in revenue. The company sold 102 Bitcoin during the month and has a current hodl of 49 Bitcoin with a value of £1.3 million
The reduction in Bitcoin was primarily due to economic curtailment at the Helios facility in Texas, which generated significant power credits. Although the company did not disclose the amount of credits received, it fully expects the total will more than offset the foregone revenue, from the curtailment, and even went further to indicate that the power credits for the month would effectively provide a negative power costs for its Helios operations.
During the month of August, Argo Blockchain installed and energized 900 BlockMiner machines, representing approximately 95 PH/s, at its Quebec facilities, bringing the Company's total hashrate capacity to approximately 2.7 EH/s. The Company expects to receive and deploy a further 728 BlockMiners over the coming months.
Bitdeer Technologies Group (BTDR)
Bitdeer has been involved in providing Bitcoin mining solutions since 2018 and on April 14, 2023 started trading on the Nasdaq under the ticker symbol BTDR, and with a current market capitalization of $1.28 Billion, that places them third, in size, behind Riot Platforms and Marathon Digital.
In August the company mined a total of 383 Bitcoin at a rate of 12.4 Bitcoin per day, an increase of 74% on the daily rate achieved in July. This increase was due to the additional 30,000 mining machines being energized during the month providing an additional 3.4 EH/s and taking their total self-mining hashrate to 7.2 EH/s.
Bitdeer also has a site in Rockdale, Texas, closely located to the Whinstone facility owned by Riot Platforms The company also used made use of their energy strategy to earn significant power credits.
Bit Digital (BTBT)
Bit Digital achieved a hash rate target of 2.0 EH/s during the month of August producing a total of 139.9 Bitcoin at a rate of 4.5 Bitcoin per day, an increase of 5.2% of the average daily rate achieved in July and delivering $3.6 million in revenues.
The company continues to strengthen the balance sheet, having only sold 59 Bitcoin during the month, The company currently holds 758.5 Bitcoin along with 13,002.1 Ethereum, providing a total crypto value held of $45.3 million, along with cash and cash equivalents of $24.9 million, in their treasury, as of August 31, 2023. This treasury provides good cash flow, when required, in readiness for the next halving
Bit Digital also continues to stake Ethereum, earning 46.7 in Ethereum rewards, in the month of August.
Bitfarms (BITF)
Bitfarms increased its hash rate to 5.6 EH/s which helped deliver 383 Bitcoin during the month of August, achieving $10.5 million in revenues, at a daily rate of 12.4 Bitcoin per day, an increase of 1.3% on the rate for the previous month. Ignoring Bitcoin equivalent units, the company had the highest production per EH/s achieving 75.1 Bitcoin per EH/s, remaining the most consistent miner year-to-date.
During August the company sold 323 Bitcoin adding proceeds of $9.0 million to cover operational costs and reduced total outstanding debt by a further $1.9 million, resulting in a remaining balance of $11.8 million at August 31, 2023, well on target to get to zero debt by the next halving. Bitfarms added 60 Bitcoin to its treasury, increasing the hodl 654 Bitcoin equivalent to $17.8 million at August 31, 2023.
At the Baie-Comeau site in Québec, there is currently 5 MW of power being utilized and the company has finished installing the additional racking and are awaiting additional miners to be re-deployed, which will increase power to a total of 11 MW. The company expects this to be completed during September.
In addition, the final miner installations in Rio Cuarto, Argentina, will help the company achieve its target hashrate of 6.3 EH/s by the end of September 2023.
CleanSpark (CLSK)
CleanSpark had its first full month operating at over 9.0 EH/s and produced 659 Bitcoin, and took their total mined in 2023 to 4,729 Bitcoin, at a rate of 21.3 per day, an increase of 14.6% on the average daily rate achieved in July. The company finished the month with 88,217 mining machines energized, providing a hash rate of 9.3 EH/s.
The 50 MW expansion in Washington had its first full month of maximum operational hashrate, delivering some of our highest daily production ever and adding to the company achieving an average hash rate utilization of 95% across all its sites.
The company sold 43 Bitcoin, representing 7% of production, at an average price of $28,200, achieving $1.2 million in revenues and added a further 616 Bitcoin to its treasury, which now stands at 1,677 Bitcoin and on track to grow considerably as the next halving approaches in April 2024.
Construction is well underway with the 150 MW expansion in Sandersville, Georgia, which will be home to 230 MW of the most efficient 45,000 bitcoin mining machines available. The Company expects a delay in energisation, and the expansion to occur in early 2024, which will take the operational hash rate to 16 EH/s.
Cipher Mining (CIFR)
Cipher Mining produced 357 Bitcoin during the month at an average daily rate of 11.5 Bitcoin per day, a reduction of 14.6% on the rate achieved in July. This reduction caused by the high temperatures and power demand in Texas resulted in the most significant monthly curtailment of the year from the power provider at Odessa. However, the company benefited from curtailing energy and received power credits totalling $1.2 million, equivalent to 45 Bitcoin.
The company sold 355 Bitcoin and added 2 Bitcoin to its treasury, taking the total hodl to 519. Cipher Mining announced a $10 million term credit facility with Coinbase which will be available to draw on, as an additional tool, in the future.
Core Scientific (CORZQ)
Core Scientific produced 965 Bitcoin during August, with 15.1 EH/s of operational hash rate, at an average daily rate of 31.1 Bitcoin per day, a reduction of 5.6% on the rate achieved in the previous month. This reduction was due to the high levels of curtailment caused by the high temperatures in August where the company reduced its power consumption and contributed 32,000 megawatt hours to help stabilize the grid.
The company has recently entered into new hosting agreements with some of its customers that will now provide the Company with a portion of the bitcoin rewards generated, after receiving payment for identified mining costs.
The Company continues to work through the Chapter 11 reorganization process and aims to emerge in the fourth quarter of 2023.
DMG Blockchain (DMGI)
DMG Blockchain achieved an operational hash rate of 0.63 EH/s, producing 46.7 Bitcoin during the month, at a daily rate of 1.5 Bitcoin, a 2.2 % increase on the rate achieved in July. The company continues to operate significantly lower than its installed hash rate due mainly to ongoing heat issues.
The company sold 92 Bitcoin hodl representing 196% of the monthly production and has a current hodl of 477 Bitcoin.
Hive Digital (HIVE)
Hive Digital produced a total of 274 Bitcoin during the month at a daily rate of 8.8 Bitcoin, an increase of 9.2% of the daily rate achieved in July. This increase was due to the company achieving 3.69 EH/s from its ASICS and GPU mining operations.
The company only managed to install 300 BuzzMiners, during the month, from an expected total of 1,700 BuzzMiners in the New Brunswick facility, due to delays in PDU upgrades. However, the company was able to report that all 2,000 Bitmain S19 XP Antminers, announced less than one month ago, have now been installed at the Lachute facility in Quebec.
Earlier this year Hive Digital utilized 400 Nvidia GPUs, previously used for mining Ethereum, ran a successful beta test and achieved a $1 million realized run rate of annual revenue in Artificial Intelligence (AI) and High Performance Computing (HPC). Since the test the company has gone on to triple its AI and HPC infrastructure.
The company announced in August that their order of high performance SuperMicro servers, which will deliver a further increase to their AI compute infrastructure capacity by 250%, providing a large step towards the growth run rate target of $15m per annum.
Hive Digital is due to install enterprise grade networking equipment, which will upgrade their AI and HPC servers in Sweden, allowing 100 GBe interconnect speeds to service users with high-end AI and HPC compute. The company is already looking to expand its services in North America and the first servers are expected to come online in Canada, during September.
Iris Energy (IREN)
Iris Energy produced 410 Bitcoin during the month at an average daily rate of 13.2 Bitcoin per day, a reduction of 3.1% on the daily rate achieved during July. The cause for the reduction was due to the significant level of curtailment in Texas caused by the high temperatures.
The company was able to capitalize on the volatility of the energy market, determining whether it was more profitable to mine Bitcoin or sell power back to the grid to drive down net electricity costs. The company received a total of $2.3 million in energy sales, during the month, equivalent to 84 Bitcoin. These power credits brought the average electricity cost to mine one Bitcoin down to $10,586 from an average cost of $15,494 paid in July, a reduction of 31.6%.
On August 29, 2023 the company announced the purchase of 248 NVIDIA latest-generation AI H100 GPUs for close to $10 million, which are due to be delivered over the next few months. Although the company continues to grow its primary business of Bitcoin mining, this diversification into utilizing its hiqh quality infrastructure with access to over 500 MW of power at the Childress site in Texas, for AI and HPC services, does not come as a total surprise when you consider the the level of quality the company uses in building its data centers.
As the global growth for AI and HPC services continues, it may provide further opportunities to Bitcoin Miners in the same way that Iris Energy, Hut 8 (HUT) and Hive Digital have embraced the move.
Marathon Digital (MARA)
As the largest publicly listed Bitcoin Miner in the world, Marathon Digital finally achieved their domestic growth target of 23 EH/s of installed Bitcoin miners. With their current operational hash rate of 19.1 EH/s in the month, it is expected that full capacity will be achieved at their facility in Garden City, Texas, as soon as Applied Digital and the utility provider finalize the paperwork.
Marathon Digital mined 1,072 at an average of 34.6 Bitcoin per day, a reduction of 8.8% on the daily rate achieved in July, again due to increased curtailment activity in Texas due to record high temperatures.
The company has now reached levels of output where they are no longer required to sell all their Bitcoin each month, to meet their energy and operational costs. In August they sold 750 Bitcoin and added the balance to its treasury which currently has 13,286 Bitcoin valued at $344.5 million. In addition Marathon Digital has $111.2 million in cash and cash equivalents.
On September 8, 2023 the company announced it had entered into privately negotiated exchange agreements with certain holders, totalling $417 million, of its 1.00% Convertible Senior Notes due 2026, in exchange for 26.2 million newly issued shares of Marathon Digital stock, at the closing price on September 7, 2023. Once the transaction is completed it will leave the company with $331 million notes outstanding.
Riot Platforms (RIOT)
Riot Platforms produced 333 Bitcoin in August at an average daily rate of 10.7 Bitcoin per day, a reduction of 18.8% on the rate achieved in the previous month. The reduction was caused by the increased mining difficulty and the significant curtailment due to the high temperatures in Texas.
This, however, provided the company with the opportunity to utilize their unique power strategy and during August, they provided over 84,000 megawatt hours of energy to the market in Texas to reduce overall demand, lower consumer prices, and stabilize the grid during a heat wave. They were rewarded with a new monthly record for Power Sales and Demand Response Credits, totaling $24.2 million and $7.4 million respectively. To put this further into context, if the company had kept the miner machines on 24/7, every day of the month, it would have produced 799 Bitcoin, 272 less than the equivalent Bitcoin received from energy credits.
If you consider the self-mining element of the company’s business, they have currently received a total of $34.4 million in energy credits year-to-date, which will be close to the energy cost of mining the 2,518 Bitcoin year to date.
Riot Platforms sold 300 Bitcoin for $8.6 million, adding 33 Bitcoin to its treasury providing a current total of 7,309 Bitcoin valued at $189.5 million.
They have reiterated that repairs are still ongoing to the damage incurred in Building G and that the company now anticipates achieving a total self-mining hash rate capacity of 12.5 EH/s at its Rockdale Facility by the end of 2023.
Phase 1 of Corsicana, providing 400 MW of power and housing 7.6 EH/s of MicroBT miners is expected to be operational be mid-2024, taking the company’s total operational hash rate to 20.1 EH/s
On September 8, 2023 the company issued a release in response to a sensational and inaccurate headline in an article issued by CNBC “Texas paid bitcoin miner Riot $31.7 million to shut down during heat wave in August.”
The company went on to clarify that it participates in several demand response programs for the benefit of all Texans, as do many industries including steel mills, electrical battery companies, oil and gas companies, and power generators. These programs utilize market forces to drive grid stability. For example, in one such program, participants are incentivized to reduce their electricity consumption during peak demand and increase their consumption during off-peak times to utilize energy that would otherwise be wasted.
SATO Technologies (SATO)
Sato Technologies mined 39 Bitcoin during the month for $1.08 million in revenues, at a daily rate of 1.3 Bitcoin per day, an increase of 5.4% on the daily rate achieved in July. This increase was achieved due to the company managing to increase the operational hash rate to 526 PH/s.
The company sold 46 Bitcoin during the month to cover operational expenses and have a current Bitcoin hodl of 36, valued at $0.9 million.
TeraWulf (WULF)
TeraWulf produced 330 Bitcoin in August, with 4.7 EH/s of operational hash rate at a daily rate of 10.6 Bitcoin per day, matching the daily rate achieved in July. Despite the increased network difficulty, there was improved performance at the Lake Mariner facility due to enhanced miner repair efforts.
The Company is expanding its Lake Mariner facility which on completion, by the end of 2023, will house a further 43 MW of capacity filled with the next generation Antminer S19j XP bitcoin mining machines.
TeraWulf was able to produce one Bitcoin at a cost of $10,247 of electricity, highlighting the company continues to have one of the cheapest blended energy prices in North America.
Miner Metrics - August 2023
For this article the financial benefits have included those achieved from adopting curtailment strategies as Bitcoin equivalent for the self-mining proportion of mining businesses.
Where miners have received energy credits for curtailing energy, these credits have been converted into Bitcioin equivalents. Therefore, when you consider the level of production by
Riot Platforms, who mined 333 Bitcoin and then considered the amount of Bitcoin equivalent achieved for the energy credits associated with self mining (65%) it produced a total of 1071.
This is effectively 1 Bitcoin less than the total achieved by Marathon Digital, but when you consider that Riot Platforms achieved this with 10.7 EH/s of operational hash rate, nearly 9 EH/s less than Marathon Digital’s current operational hash rate, the benefits prove to be significant.
Revenues by Energized Hash Rate PH/s
The table below clearly indicates how Iris Energy and Riot Platforms were able to maximize the opportunity, during the month, to not only deliver great results, but continue to be good social citizens to the state of Texas. They earned $2,727 and $2,309 per PH/s respectively.
Using the traditional Bitcoin mining only, SATO Technologies proved to be the most effective miner, achieving $1,822 per PH/s in revenues
If Argo Blockchain and Bitdeer had included their financials benefits from curtailment, they potentially would have appeared further left on the graph.
Bitcoin sold during the month of August
The North American listed miners continued to sell some or all of their production during August to cover their operational and capital costs. Bitdeer, Core Scientific, Iris Energy, SATO Technologies and TeraWulf sold their August Bitcoin production in full, with DMG Blockchain selling 196% of their monthly production.
CleanSpark, for the second month in a row, sold a small proportion, amounting to 7% and grew their Bitcoin hodl significantly, to 1,677. Bit Digital sold 59 (42%) of their 139.9 production to grow their treasury also.
Monthly and Year to Date Miner Performance
In terms of monthly production Riot Platforms and Iris Energy’s strategies provided the opportunity to earn significant Bitcoin equivalent, in the form of energy credits. This provided both companies with the opportunity to earn greater returns in alternative strategies than Bitcoin mining.
Bitfarms, CleanSpark, DMG Blockchain, HIve Digital and SATO Technologies continued to deliver consistent production by EH/s, as shown throughout the first 8 months of 2023.
The year to date position has effectively seen Bitfarms, Hive Digital and Iris Energy occupy the top 3 positions throughout the year, so far. SATO Technologies have recently been included in the monthly tables and are positioned in 4th, with only 5% separating the top 7 miners in the table.
Although Riot Platforms occupy 12th position they have been utilizing their energy strategy and curtailing with a greater frequency than other miners, benefiting from the receipt of significant energy credits. It will be interesting to see their next quarterly mining margin for the period July to September, when they submit their next 10Q, in November 2023.
