As the halving approaches, Cantor Fitzgerald has released its final pre-halving cost-per-coin analysis, providing crucial insights into which bitcoin miners are best positioned to handle the economic adjustments post-halving. 

This analysis is based on the latest Q4 2023 results and major developments in the industry from January to April 2024.

Following the publication of Cantor’s previous report in January, Bitcoin surged from $40,000 to a new all-time high of about $73,000. 

This increase is largely attributed to the success of newly approved Bitcoin Spot ETFs. Despite initial gains for miners, the sector began to underperform the token itself as the halving drew near, shifting investor focus and funds towards ETFs due to their direct exposure to Bitcoin's price movements.

Cantor’s analysis includes a detailed 'all-in' cost-per-coin metric which integrates all operational costs associated with mining a single Bitcoin. This includes electricity costs, hosting fees, and other cash expenses. 

For Q4 2023, the best-performing miners in terms of unit economics were Bitdeer Technologies Group (NASDAQ:), Cipher Mining (NASDAQ:), and Hut 8 Corp (NASDAQ:). These miners were able to keep costs low through efficient operations and strategic revenue streams such as cloud hash and hosting services.

Conversely, the worst-performing miners, including Argo Blockchain PLC ADR (NASDAQ:), Riot Blockchain (NASDAQ:), and Bit Digital Inc (NASDAQ:), faced higher costs primarily due to inefficient operations or high energy costs.

With the halving set to reduce Bitcoin mining rewards by half, miners' cost-per-coin is expected to double if the network hash rate remains unchanged. This "stress test" indicates that (NASDAQ:), Riot, and Cipher are likely to be the best-positioned miners immediately following the halving due to their efficient cost structures and robust operations. 

However, it's projected that three miners— Argo Blockchain, Inc (NASDAQ:  and Marathon Digital (NASDAQ:)—will struggle to mine profitably immediately after the halving, given their high operational costs relative to the current Bitcoin price. 

Strategic investment in Bitcoin miners

Cantor highlights that Bitcoin miners act as a call option on Bitcoin, offering low-cost access to newly issued tokens and potential for energy monetization, which provides downside protection. With improved operations since the last bull run, investing in Bitcoin mining stocks could be a strategic move for investors anticipating another bull run, despite the halving's impending impact on miner profitability.

The halving, which will reduce the reward for mined blocks, makes understanding each miner's cost structure critically important.

Cantor's all-in cost-per-coin model accounts for both electricity costs and total other cash expenses related to mining a single Bitcoin. Adding these figures together, the company concludes that the total cost to mine one Bitcoin would be $17,696, considering both electricity and other operational costs. 

With many miners moving from profitability to breakeven or loss post-halving, Cantor advises investors to focus on miners with positive free cash flow who can sustain operations without needing to raise additional capital. This approach is more resilient and profitable in the long run, especially as these miners are better positioned to leverage the next Bitcoin bull run effectively.