Bitcoin Mining Costs Surge 47% in Q4 2024, Bringing the Average Production Cost to $137,018 per BTC

This surge brings the total average production cost to $137,018 per Bitcoin, significantly higher than previous periods.

The average cost to mine a single Bitcoin surged by 47% in the fourth quarter of 2024, reaching $137,018, according to a new report by CoinShares. This installment of the CoinShares industry report tracks the average mining costs among publicly listed companies, which saw average Q4 cash operating costs rise to $82,162. When including non-cash expenses, such as depreciation of mining equipment, the total production cost arrived at $137,018 per Bitcoin. Excluding Hut 8, which reported a large tax liability related to unrealized gains, the average cash operating cost was $75,767.

The report notes that several factors contributed to the increase in mining costs. The deployment of faster hardware, which is essential for maintaining competitive mining operations, has driven up expenses. Additionally, competition within the mining sector is heating up, which, combined with volatile market prices, has pushed up the overall cost of production. Finally, rapid technological advancements in mining hardware mean that ASIC miners are becoming obsolete faster, leading to accelerated depreciation and higher non-cash expenses.

For instance, Hut 8 encountered the highest unit costs in the dataset due to a massive deferred tax liability. The company also faced elevated interest expenses linked to its credit facilities, pushing the total per-Bitcoin cost beyond $281,000. To reduce these costs, Hut 8 is pledging 968 BTC to finance 30,000 Antminer S21+ ASICs, aiming to increase its self-mining hash rate and improve its overall efficiency.

Despite the widespread increase in mining costs, some companies were able to decrease their per-Bitcoin production costs. For example, Iren managed to cut its electricity costs at the Childress facility by switching to spot pricing, reducing electricity costs per Bitcoin by 39%.

Other companies, such as Cormint, were able to lower total mining costs by 44% in Q4, largely due to a decrease in power prices to 1.8¢ per kilowatt-hour. These examples show that while the industry faces rising input costs, some players are still finding ways to improve efficiency and profitability.

Electricity remains the largest direct cost in Bitcoin mining, as miners continue to rely heavily on power-hungry ASIC machines to perform calculations. However, non-cash expenses, such as depreciation and amortization, are also significant contributors to the overall cost structure. This shift highlights the importance of maintaining high operational uptime and upgrading hardware efficiently to ensure that miners can stay competitive.

CoinShares’ data shows that despite these rising costs, most miners were still able to operate profitably in Q4 2024, with Bitcoin’s price remaining relatively stable at around $82,000. However, the second quarter of 2025 could bring more challenges for miners. Tariffs on imported rigs from China and Malaysia are expected to increase by 24% to 54%, which will likely push up breakeven costs for miners who rely on imported equipment.

The broader outlook for Bitcoin mining appears bleak, with the industry facing multiple headwinds. In addition to the pressing issues of hardware costs and electricity prices, mining companies are also facing growing tax liabilities and valuation multiples for mining companies are compressing, signaling investor concerns about the competitive nature of the sector.

To diversify revenue streams beyond Bitcoin block rewards and transaction fees, some miners are investing in data center infrastructure and high-performance computing (HPC). At the same time, the industry continues to make strides in hardware efficiency, with new ASIC models now averaging 20 watts per terahash (W/TH), a significant improvement from the 100 W/TH average in 2018. These advances are helping to keep the total energy consumption of the Bitcoin network stable, even as the hash rate continues to rise.

CoinShares predicts that the Bitcoin network will cross the one zetahash per second (ZH/s) threshold by mid-2025. However, the cost pressures faced by miners are unlikely to abate, and the industry will need to adapt to maintain profitability in an increasingly competitive environment.