HIVE‘s Cost of Bitcoin Mining Jumps 21.2% in Q3

Canada-based HIVE Digital (NASDAQ: HIVE), one of the longest-running public bitcoin mining operations, experienced a 21.2% increase in its cost of bitcoin production during the last quarter.

The company said in the third-quarter earnings report on Monday that its average cost of bitcoin production jumped to $22.6k per BTC, up from $18.7k in Q2 this year, thanks in part to the heightened competition within the network.

This elevated cost places HIVE among the less efficient operations compared to its public peers based on Q3 data as of writing. The company has been selling both its mined bitcoin and reserves during Q3 to facilitate the upgrading of its ASIC miners.

“Management has been cautious by not borrowing from predator lenders or creating massive dilution like many other miners as we strive to upgrade our suite of ASIC chips and run the business by selling our bitcoin production and 200 [BTC] of our HODL position,” said HIVE’s executive chairman Frank Holmes.

The cost of bitcoin production comprises only the expenses directly associated with mining revenue, such as power bills and on-site costs, excluding general administration and corporate overhead. This metric is pivotal in assessing operational competitiveness, especially as the network approaches bitcoin’s upcoming halving next year.

In comparison, the Q3 cost of bitcoin production for Bitfarms, Cipher, Core Scientific (NASDAQ: CORZ), and Marathon ranged from $9.5k to $18.5k per BTC. Despite Core Scientific experiencing a larger percentage jump in Q3 production costs (24%), it managed to maintain a figure below $19,000. Meanwhile, Riot reported a negative cost of bitcoin production, thanks to substantial power curtailment credits.

With bitcoin’s network hashrate sharply increasing in Q4 compared to Q3, the cost of bitcoin production is expected to rise for every company, anticipating the impending halving, and is likely to double immediately after the event unless significant efforts are made to enhance fleet efficiencies.

Regarding revenue diversification, HIVE noted that its high-performance computing segment in a beta mode generated $250,000 in revenue during Q3. Holmes highlighted that this segment is currently generating $250,000 per month, boasting a higher margin than bitcoin mining, given HIVE’s elevated cost of bitcoin production.

Mining site image via HIVE Digital