Smaller Bitcoin miners rebound as post-halving shakeout levels the field

Smaller Bitcoin miners are now gaining ground on their bigger competitors in the industry as post-halving competition returns. The Bitcoin mining industry has now become increasingly competitive as these middle-tier operators are now ramping up their realized hashrate in a bid to catch up with established companies in the field.

According to reports, realized hashrate is a sign of a level playing field, a metric that has been used since the 2024 halving. In a report by The Miner Mag, companies like Cipher Mining, HIVE Digital, and Bitdeer have expanded their realized hashrate after several years of improving their infrastructure, narrowing the distance to established players at the top like MARA Holdings, Cango, and CleanSpark.

Smaller Bitcoin miners improve their realized hashrate

In its weekly newsletter, The Miner Mag mentioned that middle-tier mining firms have shown improvement since the 2024 halving. “Their ascent highlights how the middle tier of public miners — once trailing far behind — has rapidly scaled production since the 2024 halving,” The Miner Mag said. While firms like MARA Holdings, CleanSpark, and Cango have been consistent as the largest public miners, firms like IREN, Cipher, and HIVE Digital have also posted significant increases.

Hashrate is the total computational power miners contribute to secure the Bitcoin blockchain, while realized hashrate means the actual onchain performance, or the rate at which valid blocks are mined successfully. In total, the top public miners have accumulated a total of 326 exahashes per second (EH/s) of realized hashrate in September, doubling the record level for last year. Collectively, they now account for about one-third of Bitcoin’s total hashrate.

In the race for market share, Bitcoin mining firms are now taking on record levels of debt as they expand into new mining rigs, artificial intelligence infrastructure, and other capital-intensive ventures. According to a report by investment giant VanEck, debt among Bitcoin miners has increased to $12.7 billion in just under 12 months. The figure, which rose from $2.1 billion a year earlier, shows a push in the sector to meet demands for artificial intelligence and Bitcoin production.

Miners shift to AI services to combat reduced revenue

According to VanEck analyst Nathan Frankovitz, a miner’s share of the global hashrate reduces without continued investments in the latest machines. In their October Bitcoin Chain check report, Matthew Sigel, head of digital assets research, said, “We refer to this dynamic as the melting ice cube problem. Historically, miners relied on equity markets, not debt, to fund these steep Capex costs.”

Meanwhile, there has been a growing number of Bitcoin miners trying to diversify their income by shifting their energy capacity towards AI and HPC hosting services after the April halving that saw Bitcoin rewards cut to 3.125 BTC. “In doing so, miners have secured more predictable cash flows backed by multi-year contracts,” Frankovitz and Sigel said. “The relative predictability of these cash flows has enabled miners to tap into debt markets, diversifying their revenues from Bitcoin’s speculative and cyclical prices and lowering their overall cost of capital.”

In addition, Bitcoin miners pivot to AI and HPC hosting has been branded as no threat to the network’s hashrate because AI’s priority for electrons is a net benefit to Bitcoin. “Bitcoin mining remains an easy way to quickly monetize excess electricity in remote or developing energy markets, effectively subsidizing the development of data centers that are designed with AI, HPC convertibility in mind,” they said. At the same time, several miners that were interviewed by the pair said they are exploring ways to monetize excess capacity when demand for AI services slows down.