Bernstein Report: Top Crypto Miners Set to Benefit Most as Capacity Surges

Wealth management company, Berstein has said that digital asset mining firms with high capacity and a low production cost will become the biggest gainers in the wake of recent trends. 

According to the report released on Aug 3, the top 4 largest miners who have invested heavily in equipment and capacity will make the most profit with Bitcoin (BTC) hovering around $30,000.

In previous months, there has been an uptick in capacity increase by the top 16 publicly listed mining firms. The added capacity reflects the fact that these firms account for 16% of the total BTC mined. 

Per the report, these top firms have a projected growth of 182% in the next couple of years as the upscaling spree rallies on. 

With a combined mining strength of 72 exahashes per second (EH/s), the report states that it would be easier for these companies to break even as firms recover from the turbulent months of 2022. 

“However, the larger miners with low cost of production and low debt are likely to be the big beneficiaries of capacity addition, with greater capacity to withstand any bitcoin price volatility and cost spike from upcoming bitcoin halving in Q1 2024.” 

The volatility of prices in crypto influenced by macroeconomic conditions would not affect the productivity of top firms as they have a debt-equity ratio above 1.

As a result of the size of their operations, they hold BTC on their balance sheet which gives them leverage over others as they can wait for higher prices to sell their assets or transfer it to exchanges.

Halving and higher BTC prices may change the tide

Higher BTC prices over the years mean more profits for miners and smaller-scale miners tend to break even with an upward market. 

A bearish outlook in the market leads to miners taking hits, adjusting positions, and selling their crypto holding just to break even. In worse cases, mining firms are bought out of business or become moribund. 

The reports noted that an uptick in prices this year hovering around $30,000 would favor the entire mining sector.

However, top mining firms who keep production of 1 BTC below $15,000 are on track for a long win with the next halving set to increase the mining difficulty on the asset. 

“With the upcoming halving, that would double the cost of production, and would push a few miners to break-even, assuming no price increase from here”

Similarly, JP Morgan stated that the mining industry will gradually consolidate leaving more prominent players with low costs in business. Firms like Hut 8 have taken proactive steps to increase their efficiency as the firm secured a $50 million credit from Coinbase.