How Do Bitcoin Mining Companies Make Money

A mining company's revenue comes from two sources: the newly issued bitcoin received for creating a block (3.125 BTC per block after the April 2024 halving) and the transaction fees included in that block. Under normal conditions, fees make up 1–5% of total revenue, but on days with heavy demand for data inscriptions such as Ordinals or Runes, fees have temporarily exceeded 20%. Because revenue is effectively 'Bitcoin price × amount mined,' mining company stocks tend to move like a leveraged play on the price of Bitcoin.

Most of the cost side is electricity. A large operator's actual mining cost is determined by the product of the electricity rate per kWh and equipment efficiency (J/TH), plus depreciation, labor, pool fees, and hosting costs. Companies that secure electricity around $0.03–0.05 per kWh are considered competitive within the industry. Once electricity costs exceed $0.08, older-generation equipment enters a range where mining becomes a loss-making activity after a halving.

The single number that compresses this relationship is hashprice — the expected revenue, converted to dollars, from running 1 PH/s of hashrate for one day. It rises when the price of Bitcoin rises and falls as network-wide hashrate increases or a halving occurs. It's the first value examined when forecasting a mining company's results, and it's published for free by sources such as Hashrate Index.

Bitcoin automatically adjusts mining difficulty every 2,016 blocks (about two weeks) to keep the average block interval at 10 minutes. So even if mining companies worldwide double their equipment, the total amount of bitcoin issued per day does not change — only each miner's individual share is halved. This means the mining industry is not a competition to grow the pie, but an industry competing over a fixed pie.

As a result, competition among companies converges on 'cheaper electricity and more efficient equipment.' The 2020-generation equipment (S19, roughly 34.5 J/TH) and the 2024-and-later generation (S21, roughly 17.5 J/TH) produce nearly double the hashrate at the same power draw. Companies that miss an equipment upgrade cycle tend to fall behind first at each halving — Core Scientific's Chapter 11 filing in 2022 and large-scale mining farm shutdowns in 2018 and 2022 are examples.

The geographic landscape has also shifted. Since China's complete mining ban in 2021, hashrate has moved to the United States, Russia, Kazakhstan, and the Middle East, with the U.S. currently estimated to account for around 35–40% of the total. The Cambridge Centre for Alternative Finance's (CCAF) country-level hashrate estimates are a representative source showing this trend.

U.S.-listed mining companies broadly fall into three business models. The first is the 'accumulator' model, which retains most of the bitcoin it mines. Marathon Digital (MARA) is representative, with among the largest bitcoin holdings of any listed company. Its stock reacts most sensitively to the price of Bitcoin.

The second is the 'energy' model, which also runs a power business alongside mining. Riot Platforms (RIOT) participates in demand-response programs in Texas, halting mining and receiving power credits when the grid is strained. CleanSpark (CLSK) focuses on securing low-cost power and operational efficiency to lower its mining cost.

The third is the 'data center' model, converting toward AI and high-performance computing (HPC). Core Scientific (CORZ), which has a contract with CoreWeave, along with IREN, TeraWulf (WULF), and Hut 8 (HUT), are redirecting their existing power capacity and data center sites toward renting out AI compute. This is because contract-based rental revenue is more stable than mining revenue, and it has become the biggest variable dividing mining company valuations since 2024.

Other players include Bitfarms (BITF, Canada and Paraguay), Cipher Mining (CIFR), Bitdeer (BTDR, which also manufactures equipment), and HIVE Digital. On the equipment manufacturing side, Bitmain (Antminer) and MicroBT (Whatsminer) effectively split the market between them.

When comparing mining companies in practice, four figures matter: operating hashrate (EH/s) and contracted power capacity (MW), actual mining cost per BTC, bitcoin held, and dilution history from equity offerings and convertible bonds. Because most mining companies finance equipment purchases through stock issuance, per-share value often stagnates even as hashrate grows.

The risks are structural. The halving cuts revenue in half every four years, and electricity costs and regulation can change abruptly with regional policy — for example, the U.S. Energy Information Administration's (EIA) 2024 survey of mining power usage, and ongoing discussions of mining taxation in various countries. When this coincides with a fall in Bitcoin's price, more companies shut down equipment operating below cost, which in turn pushes hashrate and difficulty lower.

This page is a description of industry structure, not a recommendation of any specific stock. The figures are estimates based on public data and change substantially each quarter. The latest values should be checked directly in each company's Monthly Production Update and SEC filings.