Bitcoin Mining Reaches New Heights: Understanding the Zetahash Threshold
Bitcoin mining has crossed a significant milestone, reaching the zetahash threshold in September with an average of 1.034 ZH/s. This achievement coincided with a decline in hash price to below $47 per PH per second. According to a report by The MinerMag, this surge in difficulty has led to a significant increase in miners’ stock values, nearly doubling since August to reach approximately $90 billion as of October 15. Meanwhile, the price of Bitcoin (BTC) fell by 3.7 percent over the same period.
The focus of the sector has shifted towards balance sheet capacity, convertible bonds, and high-performance computing contracts. Record difficulties have squeezed operating margins, and electricity costs have remained near fixed-price agreements. The combined market capitalization of listed operators rose from around $41 billion in August to $58 billion in September and then to $90 billion by mid-October. This increase occurred despite the hash price returning to levels last seen in May.
| Period | Combined market capitalization | Notes |
|---|---|---|
| August | $41 billion | Rally start window |
| September | $58 billion | Sustained outperformance against BTC |
| October 15th | $90 billion | More than doubled since August; BTC −3.7% in the same period |
Reassessing the Narrative: Digital Infrastructure and Additional Revenue Streams
The reassessment of the mining sector follows a narrative around engagement in digital infrastructure. Miners are presenting contracted energy, data center buildouts, and AI colocation as additional revenue streams that are less tied to block rewards. This shift in focus is reflected in the performance of top miners, with Bitfarms, Canaan, and CleanSpark being among the top performers last month, with increases of 162 percent, 149 percent, and 125 percent, respectively.
MARA, Riot, and BTC also saw significant increases, with MARA achieving 53.3 EH/s, about 88 percent of staked capacity, and mining 736 BTC, selling about half. Bitdeer increased its realized hashrate by a third to 32.7 EH/s, moving up to fifth place, while HIVE hit 19.3 EH/s and Cipher hit 18.2 EH/s, both approaching the 20 EH/s threshold that now informally defines the upper middle class.
Financing and the New Regime
Financing is a critical pillar of the new regime, with miners raising over $1 billion through convertible bonds in the second quarter and nearly $3 billion already in the third quarter. Issuers include Cipher, MARA, and TeraWulf, with IREN closing on $1 billion and TeraWulf outlining plans for $3.2 billion in senior secured notes. The structure of this cycle is different from the ASIC and infrastructure-backed loans of 2021, which later deteriorated as today’s zero-coupon convertible bonds push cash interest out of the short term and leave the path to equity conversion open.
Economics at the Oil Rig Level
Using The MinerMag’s base case scenario of $0.06 per kWh, revenue is approximately $0.054 per TH per day. Payback periods range from around 458 days for S19XP+ Hyd to around 900 days for S23 Hyd in efficiency ranges of 9.5 to 19 J/TH. The report’s rule of thumb for elasticities implies that a 10 percent change in revenue per TH per day shifts payback by about 10 to 15 percent because operating costs tied to joules per terahash dominate while short-term capital costs are fixed per TH.
| Miner hardware | Capex per TH/s | Sales per TH/s | Sales per kWh | Opex per TH/s | Payback (days) |
|---|---|---|---|---|---|
| S23 Hyd (9.5 J/TH) | $30 | $0.054 | $0.237 | $13.68 | 900 |
| S21XP Imm. (13.5 Y/TH) | $18 | $0.054 | $0.167 | $19.44 | 653 |
| S21+ Hydro (15 Y/TH) | $21.5 | $0.054 | $0.150 | $21.60 | 846 |
| S21 Pro (15 Y/TH) | $16 | $0.054 | $0.150 | $21.60 | 630 |
| S21 Imm. (16 y/th) | $15.5 | $0.054 | $0.141 | $23.04 | 647 |
| S21+ (16.5 Y/TH) | $15 | $0.054 | $0.136 | $23.76 | 645 |
| S19XP+ Hyd (19 Y/TH) | $9 | $0.054 | $0.118 | $27.36 | 458 |
The Equity Story and Non-Mining Revenues
The equity story now depends on the implementation of non-mining revenues. MinerMag’s recent pipeline articles include a $3 billion Google-backed AI hosting initiative tied to Cipher, expanded credit support for CleanSpark’s high-performance computing push, Galaxy’s $460 million Texas site build as an AI hub, and the one aligned with Microsoft Agreement between Nscale and Ionic Digital set at $14 billion. While these goals are big, they require interconnects, transformers, and computing power tenants to arrive on time, and disclosures are required to convert headlines into ongoing revenue.
Jurisdiction contributes to the variation, with MinerMag citing new capacity in Norway and Bhutan under hydropower-rich frameworks, as well as Laos exploring dam-linked mining financing, each of which shifts the global cost curve by moving incremental exahash into lower-cost areas. At the same time, idiosyncratic risks, from U.S. state litigation such as Kentucky cases to investigations into individual European operators, are driving multiples more widely diversified as investors price in regulatory and legal differences based on geography and corporate governance.
Conclusion and Future Outlook
In conclusion, the Bitcoin mining sector has reached a new milestone with the zetahash threshold, marking a new debt-fueled era for struggling miners. The sector’s focus has shifted towards balance sheet capacity, convertible bonds, and high-performance computing contracts. Financing is a critical pillar of the new regime, with miners raising significant amounts through convertible bonds. The economics at the oil rig level are complex, with payback periods ranging from around 458 days to around 900 days. The equity story now depends on the implementation of non-mining revenues, with MinerMag’s recent pipeline articles highlighting significant initiatives in AI hosting and high-performance computing.
Read more about the 1 Zetahash milestone and its implications for Bitcoin miners in the original report by The MinerMag.
