Spending running wild: An analysis of the public bitcoin miners' administrative costs

Some public bitcoin miners spend more than half their revenue on administrative costs. This blog post explains why these companies' administrative costs are a problem and reveals who are the biggest spenders.
Source: All these companies' 2022 (Q2, Q1) and 2021 Annual report

Like other commodity-based industries, bitcoin mining is a hyper-competitive industry where a company's only possible competitive advantage stems from achieving lower costs than its competitors. Only the most cost-efficient miners will survive in the long-term, as the bear cycles will gradually shave away the high-cost players.

Most bitcoin mining investors understand the importance of cost minimization but have focused almost solely on the public miners' direct bitcoin production costs, disregarding their indirect costs like administration. As I will show in this blog post, non-revenue generating administrative expenses are generally much higher in the bitcoin mining industry than in similar industries. Bitcoin mining investors should consider these costs, as they can eat up massive shareholder value over time.

What are administrative costs, and why should miners strive to minimize them?

What I define as administrative costs are often referred to as “Selling, General, and Administrative Expenses (SG&A)” in financial statements. It describes the expenses incurred by a company not directly tied to generating revenue, like executive salary and stock compensation.

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