Why Most Public Bitcoin Miners Have Performed Terribly In Their Lifetimes

Bitcoin public mining firms have struggled along with the rest. These companies saw their cash flows decline due to bitcoin’s falling price, and were on the verge of going bankrupt. While it may seem like these losses have been caused by the bear markets, the fact is that they have been there all along.

Bitcoin Mining is Not Profitable

Both large and small public bitcoin miners have seen a rise in popularity during the last year. Investors could place bets on crypto markets without needing to purchase any digital assets. These public miners made millions in their business. Problem is that these companies don’t have the means to keep their earnings throughout their lives.

These are the earnings that a company uses to show its net income. Looking at the financial statements these public miners have, it is not encouraging. These numbers show that the majority of public bitcoin miners are unable to keep any of their net income since they were established.

One of the problems with these miners is how much they spend on administrative expenses. This report shows that compared to their counterparts in gold and oil & gas, bitcoin mines used an average of 50% of their earnings for administrative costs. 

Public bitcoin miners

 Source: Arcane Research| Source: Arcane Research

These companies also had extensive expansion plans that they committed to during the bull markets, which has been difficult to execute in the bear market. The result has been a sharp decline in retained earnings for most public miners.

Are Any Mining Companies Profitable?

Some public miners of bitcoin have proven to be able, over time, to work against the grain while still retaining their profits in the red even in turbulent times. Argo Blockchain Mining Company is one such company. Arcane Research has listed Argo Blockchain as the public BTC miner that earns positive retained earnings over $26 million in a recent report. Rest of the report shows a dark picture of bitcoin mining.

The majority of companies experienced significant deficits throughout their entire lives. Core Scientific, with $1.304 trillion in deficit, was the largest. Riot Blockchain, which has seen a substantial deficit of $569 millions over its life span, is next.

Bitcoin price chart from TradingView.com

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

Marathon Digital, Hut 8 and Stronghold were also on the list with deficits of $221 million and $156 millions, respectively. CleanSpark, Bitframs and Bitframs were the other two that came up with deficits of $154 and $137 millions, respectively.

These companies are now spending more money that they have made during the bull market. These numbers reveal that most companies lost money even in the bull market when cash flow was good for BTC mining equipment. These companies’ stocks should not be invested in without proper risk management and caution. 

Featured Image from Blockchain News. Charts from Arcane Research and TradingView.com.

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