JPMorgan Releases Exclusive Bitcoin Mining Report – There’s a Big Shift

Public Bitcoin miners are expected to continue to increase their dominance of the BTC network hashrate as they focus on cost-cutting measures and profitability, according to a new report from JPMorgan analysts.

The report, prepared by managing director Nikolaos Panigirtzoglou, notes a growing trend toward vertical integration among public miners, with these companies securing independent power sources and developing specialized mining chips to reduce operational costs, especially as hashrates increase and the Bitcoin price fluctuates.

In recent months, several major Bitcoin mining firms have made strategic acquisitions to secure energy supplies and reduce costs. For example, in February, Mara Holdings bought a wind farm in Texas, while Bitdeer acquired a gas-fired power plant project in Canada. Analysts said these moves provide stable energy access and reduce operating expenses.

Bitdeer’s collaboration with semiconductor giant TSMC has also allowed it to develop more efficient BTC mining chips. The partnership has allowed the firm to renew its mining fleet and further increase its profitability by selling surplus equipment on secondary markets.

While some BTC miners are exploring horizontal integration such as artificial intelligence (AI) and high-performance computing (HPC) to diversify their revenue streams, many are now prioritizing cost efficiency through vertical integration, focusing on procuring cheaper electricity and upgrading mining rigs to withstand market volatility, according to the report.

JPMorgan analysts said that the BTC network halving in 2024, combined with increased network difficulty and BTC price volatility, increases the need for miners to become energy self-sufficient and invest in in-house hardware development.

Public miners have also used equity financing to support operations, with record equity financing volumes seen in 2024. However, as bitcoin prices stabilize, firms are turning to debt financing to continue operations without selling bitcoin holdings.

*This is not investment advice.