August mining updates are hitting the newswires.
Bitcoin price is down 11% from its 52 week low, mining difficulty has just increased by over 9% and temperatures across the world continue to soar, causing miners to curtail their energy, once again. Despite the inhospitable environment, miners trudged on with many showing the fruits of operational improvements this past month.
Summary metrics
The majority of miners actually improved their monthly mining performance per EH/s. Bitfarms (BITF) finished first, followed closely by Hive Blockchain (HIVE) and Iris Energy (IREN). A special mention is noted to DMG Blockchain, who finished a fourth after achieving 134 Bitcoin per EH/s.
Note: The table above includes a cost per EH/s based on the Enterprise Value (EV) and considers the effective cost of the current hashrate for each miner as at July 31, 2022 and future hashrate at December 31, 2022. (EV is a metric used to value a company and is usually considered a more accurate reflection of a company's value compared to market capitalization. Its calculated by taking the market capitalization of the company, adding the total debt on the balance sheet and deducting any cash and cash equivalents, such as cryptocurrencies. EV can also be used as proxy for a company's liquid purchase price).
Bitfarms (BITF)
Bitfarms provided an excellent monthly update, increasing production by 7% month-over-month to a record 534 Bitcoin, equivalent to $10.84 million in revenue. The company achieved a daily average of 17.2 Bitcoin ($349k per day) with an average hashrate of 3.8 EH/s. Total operational hashrate clicked slightly higher at 3.9 EH/s by month’s end.
When you consider Bitfarms were operating at 2.3 EH/s in January 2022, the growth in hashrate by the end of August, as shown in the table below, is an impressive 70%. With the first ten of 50 megawatts (MW) energizing at the new facility in Rio Cuarto, Argentina, Bitfarm’s hashrate should surpass 4.2 EH/s by the end of Q3 2022 and a total 6.0 EH/s to be achieved by the end of Q4 2022.
Bitfarms sold 427 Bitcoin during August to cover operational costs and currently holds 2,128 Bitcoin in custody, representing a value of $43 million. We shall soon see if the operational efficiencies are enough to place them in the top three Bitcoin miners.
Cleanspark (CLSK)
Cleanspark quietly goes about its business and continues to impress with its monthly mining updates, featuring regularly in the ‘top three’ mining statistics. August appears to be no exception.
The company mined 395 Bitcoin in August–a monthly record–taking the year-to-date 2,642 Bitcoin. Cleanspark also increased its hashrate from 2.9 EH/s to 3.4 EH/s, and now has a deployed fleet of 36.8K of the latest generation miners. That takes the growth in hashrate over the past 12 months to over 300%.
With the improvements, the firm should now be considered a ‘Top 5’listed North American miner, according to Cleanspark CEO Zach Bradford.
Cleanspark has not used a ‘Hodl’ strategy and in August held only 526 Bitcoin in custody, having sold 388 Bitcoin to fund growth and operations. It has one of the lowest all-in ‘cash costs’ for mining Bitcoin at $17,258 per coin with a gross margin of 67%, according to recent quarterly reports.
Furthermore, the firm has a high total amount of assets on its balance sheet at $411 million, with only $34 million in liabilities, as of June 30, 2022. A breath of fresh air when compared to other miners who’ve heavily entrenched themselves in debt markets.
August proved to be a record month for Hive Blockchain, according to self-reported figures. The firm produced 290.4 Bitcoin at a rate of over 140 Bitcoin per EH/s, with an additional 3,010 Ethereum. The Vancoever, Canada-based firm was able to utilize an average monthly Bitcoin hashrate of 2.07 EH/s and 6.19 TH/s of Ethereum mining capacity during the month of August, for a total average of 9.4 Bitcoin per day. Even when the network difficulty increased towards the end of the month by 9%, they were still able to produce nine Bitcoin per day.
Hive Blockchain has used the sales of both Bitcoin and Ethereum to fund their capital and operational growth throughout 2022. This month's record mining performance should challenge top performer Iris Energy year-to-date, when compared from Bitcoin mined per EH/s.
Hive Blockchain (HIVE)
Hive Blockchain currently mines a significant amount of Ethereum and will have to consider alternative uses for its 6.49 TH/s of Ethereum mining capacity at the end of July, with the potential Ethereum ‘Merge’ to Proof-of-Stake (PoS). To manage this risk, the company has commenced case studies on the hashrate economics of Ethereum Classic and other GPU mineable coins at an industrial scale.
Hive Blockchain has also recently announced a $100 million ATM’ equity offering, which effectively means the company can sell shares over a given period up to a total of $100 million. The company intends to use the funds for capital growth and operational and corporate costs. Although dilution does not generally sit well with investors, the timing of this could provide opportunities for the company to purchase distressed assets.
Riot Blockchain (RIOT)
All eyes were on Riot Blockchain’s August update, after July’s strong ming report including the $9.5 million energy credit announcement.
This past month, Riot Blockchain produced 374 Bitcoin for an equivalent of 83.1 Bitcoin per EH/s. While 40% lower than the rate achieved by Hive, Riot was able to significantly reduce their overall power costs through effective employment of its proprietary power strategy. The Castle Rock, Colorado-based miner earned $3 million in power credits, worth about 136 Bitcoin using August’s average Bitcoin price.
The company sold 350 Bitcoin during the month to cover operational costs and have a Hodl as at August 31, 2022 of 6,720 Bitcoin. The miner deployed an additional 6,347 immersion-based S19j Pros, taking the operational hashrate to 4.8 EH/s. A further 6,336 miners staged for deployment in September, which will take the firm’s hashrate to 5.4 EH/s by the end of the month. Riot remains on target to achieve a planned 12.5 EH/s by the end of Q1 2023, as construction at their flagship site at Whinstone nears completion. Riot also host 200 megawatts (MW) of miners at this site.
At $0.029/KWh, Riot has one of the cheapest energy costs of all public miners. If you consider the most recent quarterly update, the company has a gross margin of 61% and an all-in ‘cash cost’ of $17,896 per coin–a value only beat by Cleanspark (CLSK).
Riot shareholders recently moved against a bid to increase executive stock compensation. The proposal would have seen the chief executive officer receive $21.9 million, the executive chairman $21.3 million and the lowest paid of five named directors receive $13.2 million. While other miners such as Marathon Digital and Core Scientific offered stock compensations in 2021 and 2022, similar industries reportedly offer lower compensation.
Argo Blockchain (ARB.L ARBK)
Argo mined 235 Bitcoin in August, an increase of 7.3% over July’s values and equivalent to 7.1 Bitcoin mined per day. The company increased its hashrate with the installation of Bitmain S19j Pro miners, taking the hashrate from 2.23 EH/s to 2.5 EH/s as at August 31, 2022. The firm maintains its goal of 3.2 EH/s by the end of October. That hashrate goal should be more easily achieved with Argo’s Helios facility total use of immersion mining.
Argo also updated shareholders on its plans to reduce its order of Intel Corp (INTC) chips to only 0.9 EH/s. Argo is looking to both preserve capital and produce a more efficient machine with the chip, hopefully capable of challenging the Bitmain S19 XP.
The company has 1,098 Bitcoin held in custody, some of which is leveraged against a loan with Galaxy Mining (GLXY). The company sold 432 Bitcoin last month to meet its operational and capital requirements. Argo also contracted hosting space to an undisclosed third party for up to 32 megawatts (MW) of power–enough electricity to power some 10,000 machines. Argo stands to gain 25% of the net profits from the hosted machines, according to the firm.
Two areas of concern do remain: the lack of a fixed power purchase agreement (PPA) at Helios and lower than expected Bitcoin output when compared to reported hashrate.
First, the current agreement at Helios provides for electricity at spot power prices. Energy prices across the United States–particularly sourced from natural gas–continue to see near parabolic cost rises. In fact, Argo’s reached $0.09 per KWh last month at Helios, or three times the price normally obtained for the same time period in prior years. Previous shareholder updates further targeted $0.02-$0.025 per KWh, indicating how far the market has moved against expectations.
Second, Argo has struggled to achieve anything near the output from the monthly listed hashrate, even with the commissioning of the Helios site in May. Self-reported Bitcoin mined per EH/s has been consistently lower than the majority of peer North American listed miners.
However, are we finally starting to see some green shoots? Argo’s monthly mining performance finished a credible seventh out of eleven in both July and August. And monthly Bitcoin production has also increased month-over-month by double digit percentages. Upon reflection, it's likely Argo needed additional time to fully deploy a project like Helios.
Iris Energy (IREN)
I’m not sure we’ve actually seen a NASDAQ listed miner double its operational hashrate in one calendar month. That is, until now. Iris Energy increased its quoted hashrate to over 2.4 EH/s (monthly average 2.2 EH/s) in August, from an average hashrate of 1.117 EH/s in July. The company produced 301 Bitcoin–an increase of 96%–achieving $6.629 million in revenues. Gross mining margins clocked in at 63%, after accounting for direct energy costs to mine.
Total operational hashrate was revised from 4.3 EH/s to 4.7 EH/s by the end of 2022, with an additional 0.4 EH/s due to be deployed at Iris Energy’s Mackenzie site. Earthworks have commenced at their Childress site (600 MW) with an initial planned development of 40 MW sufficient for an additional deployment of 1.3 EH/s.
Iris Energy has consistently performed well over the last 12 months and currently top the performance rankings from a year-to-date perspective in terms of Bitcoin mined per EH/s. Yet, Hive Blockchain (HIVE), Cleanspark (CLSK) and Bitfarms (BITF) appear to be gaining ground in recent months.
Core Scientific (CORZ)
Core Scientific mined 1,334 Bitcoin in August at an average rate of 43 coins per day. Even after taking account of a total energy curtailment of 11,057 MW hours, the firm increased mining production 9.3% over the previous month.
Mining production was helped by the addition of 17,000 new miners, taking the Austin, Texas-based firm’s self-mining hashrate from 10.9 EH/s to 12.69 EH/s. The company expects to install a further 43,000 miners by the end of the year, pushing self-mining deployments near 17.0 EH/s.
The company has cash holdings of $47.2 million and a current ‘Hodl’ of 1,409 Bitcoin worth an estimated $28.6 million. Core Scientific sold 1,125 coins in August worth a total $25.9 million to cover operational costs.
Digihost Technology (DGHI)
Digihost Technology mined 68 Bitcoin in the month August with an average hashrate of 650 PH/s. The company has a ‘Hodl’ of 176.61 Bitcoin and 1,000 Ethereum worth a total of $5.1 million as of month’s end. The company currently has no debt on the balance sheet.
The company also announced that it has negotiated lower direct energy costs with Alabama Power, thereby providing a reduction in Digihost’s future operating costs. The company continues to build out the facilities in Alabama with a capacity of 22 megawatts due online in Q4 2022 and a further 55 MW by the end of Q1 2023.
DMG Blockchain (DMGI)
DMG Blockchain produced 69 Bitcoin in the month of August with an average hashrate of 515 PH/s, providing 134 Bitcoin per EH/s–a ratio only bettered by Bitfarms (BITF), Hive Blockchain (HIVE) and Iris Energy (IREN) self-reported numbers.
The Vancouver, Canada-based firm has a total ‘Hodl’ of 362 of Bitcoin with a value of $7.35 million. DMG has regularly sold Bitcoin to fund operational and capital growth and currently does not have any long term liabilities. However, the company continues to look at the debt markets as an opportunity to grow its hashrate, such as with the installation of immersion tech at its Christina Lake facility. That deployment will increase its planned hashrate from 1.0 EH/s to 1.4 EH/s, per DMG.
Hut 8 (HUT)
Hut 8 mined 375 Bitcoin at an average of 12.1 per day, an increase of 13.6% from the previous month. They increased the number of GPUs deployed by 180. All Hut 8 GPUs currently mine Ethereum, but receive payment in Bitcoin. ‘Equivalent’ hashrate stands at 2.98 EH/s and is projected to reach 3.5 EH/s by the end of the year.
The company has a current ‘Hodl’ of 8,111 Bitcoin valued at $164.7 million, a total only surpassed by Marathon Digital (MARA). Once Ethereum moves to a ‘proof-of-stake’ upgrade, Hut 8 plans on dedicating its GPU fleet to other revenue streams, such as artificial intelligence.
Marathon Digital (MARA)
Marathon Digital mined 184 Bitcoin in August–a 155% increase of 112 Bitcoin on their previous month’s mining activity. This was helped by the energizing of 25,000 mining rigs at a newly launched Compute North facility in Texas. Marathon Digital’s total hashrate increased to 3.2 EH/s with a planned total deployment of 10.1 EH/s by end of year following the deployment of 65,000 miners. Marathon Digital maintains its goal of 23 EH/s by mid-2023.
The company has a cash balance of $71.4 million and a Bitcoin ‘Hodl’ of 10,311 BTC equivalent to $236.3 million, the highest of all the publicly traded North American miners. They will further benefit from a contracted discount of the Bitmain S19 XP due to be delivered over the next four months. S19 XPs will constitute 66% of all Marathon Digital’s miners, providing an efficiency boost of 30% compared with prior generation machines.
Update (Sunday, September 11): Adds updates for other miners. Adds summary metrics.
