Why Most Public Bitcoin Miners Have Performed Terribly In Their Lifetimes


Public Bitcoin miners are struggling alongside the rest of the cryptocurrency market. As the price of bitcoin fell, these companies saw a drop in cash flow, which brought them to the brink of bankruptcy. However, while the losses incurred by public bitcoin miners appear to have taken place in a bear market, they are going backwards.

Bitcoin miners are barely profitable

The popularity of public bitcoin miners, both large and small, has grown over the past year. Their shares allowed investors to bet on the cryptocurrency market without having to purchase any of the digital assets themselves. Thus, public miners saw revenue in the millions of dollars. The problem comes from the ability of these companies to actually retain their profits throughout their lives.

Retained earnings are how a company shows total net income accrued over its life and looking at the financial statements of these general miners, it’s less than encouraging. It shows that most public bitcoin miners haven’t been able to keep any of their net worth since their founding.

The obvious problem with these miners was how much of their profits were earmarked for administrative expenses. this is Report He explains that compared to their gold, oil and gas counterparts, bitcoin miners have used an average of 50% of their profits for administrative costs.

Public Bitcoin Miners

Public miners see in deficit | Source: Arcane Research

In addition, these companies committed to large-scale expansion plans during a bull market that became difficult to achieve in a bear market. This has translated into a sharp decline in retained earnings for most public miners.

Are any mining companies profitable?

Over time, there have been some public bitcoin miners who have been able to reverse the tide and get their retained earnings green even during these trying times. One of these is the Argo Blockchain miner. In a report by Arcane Research, Argo Blockchain is listed as the only public BTC mining company with positive retained earnings of $26 million. The rest of the report paints a bleak picture for the Bitcoin mining industry.

Most companies have had large deficits of varying degrees throughout their lives. Core Scientific recorded the largest deficit at $1.304 billion. Next in line is Riot Blockchain which has seen a massive deficit of $569 million over its lifetime.

Bitcoin price chart from TradingView.com

BTC holds above $19,000 | Source: BTCUSD on TradingView.com

Other companies on the list include Marathon Digital, Hut 8 and Stronghold, with deficits of $357 million, $221 million and $156 million, respectively. Two others, CleanSpark and Bitframs, posted shortfalls of $154 million and $137 million.

What this shows is that these companies spend more money than they earn during this time. The numbers show that even during the bull market, when the cash flow of BTC miners was high, most of these companies continued to lose money. Therefore, investment in the shares of these companies must be treated with caution and appropriate risk management.

Featured image from Blockchain News, charts from Arcane Research and TradingView.com

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