Report: Bitcoin Mining Companies Spend Excessively On Administration Compared To Other Industries |


Data shows the public Bitcoin mining companies have been spending more excessively on administration, compared to other industries like gold mining.

Average Public Bitcoin Miner Spends 50% Revenues On Administrative Costs

According to a new blog post by Arcane Research, most BTC miners have only focused on minimizing direct production costs, and neglected indirect expenses like administration.

How To Get Free Crypto  
5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!

The “administrative costs” here refer to the expenses incurred by companies that aren’t directly related to revenue generation. Examples of such costs include stock compensation and executive salary.

The “direct production costs,” on the other hand, include mining farm staff salaries and electricity-related costs. These two expenses make up for the two main types of expenses suffered by Bitcoin miners.

Here is a chart that shows how the BTC mining production margin has been like since 2021:

BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?
Looks like Argo had 80% margins during the period | Source: Arcane Research

As you can see in the above graph, public Bitcoin mining companies have maintained their margins around 60% to 80% during recent years, suggesting that they have been good at minimizing their direct production related costs.

The report notes that these margins should be able to cover depreciation and amortization of mining assets, administrative costs, and some profit on top.

Coinbase Banner  

Since the first of these is unavoidable, it would appear that the best way for miners to improve their profits is to reduce the administrative costs.

However, as the below chart shows, the public Bitcoin mining companies have been spending big on these expenses since 2021.

The high revenue percentages spent on administration by the miners | Source: Arcane Research

From the graph it’s apparent that public miners have been spending an average of 50% of their revenues on administrative costs alone.

Marathon spent even higher than the rest of the market, paying off administrative expenses with 97% of their total revenues in the last couple of years.

FreeBitcoin Banner  

The company’s generous executive stock compensation program is behind why the firm has been dropping nearly all of its revenues on administration.

Some companies, however, have been much better at minimizing these costs. Argo managed to keep these expenses at just 16% of its total revenues.

A look at a comparison with other industries like oil and gas industry, and gold mining reveals that Bitcoin mining firms have been spending much more excessively on these costs.

Companies in gold mining spent only 3% of their revenues on these expenses since 2021 | Source: Arcane Research

The report explains that the main reason behind this discrepancy lies in the fact that the Bitcoin mining industry is still relatively immature, and as such, their revenues are still quite low.

Companies have been hiring experienced executive teams keeping future growth goals in mind, and hence have needed to offer highly competitive packages.

However, the post points out that the mining industry is still massively overcompensating these executives. The source of this overspending is likely because of mining being a capital intensive industry, which makes it easier to finance costs like these, and the fact that shareholder oversight is weaker in these firms due to the immaturity of the sector.

BTC Price

At the time of writing, Bitcoin’s price floats around $19.4k, down 13% in the past week.

BTC surges up following a plummet | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on, charts from, Arcane Research

Go to Source
Author: Hououin Kyouma

Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.