Bitcoin miners are approaching $40 billion in market capitalization as mining difficulty increases for five consecutive years.

Publicly traded Bitcoin (BTC) miners are approaching the milestone of $40 billion in total market capitalization, according to Farside data, with the price of Bitcoin breaking multiple all-time highs and reaching six figures for the first time in seven months. It doubled in just one day.

The biggest challenge for miners is profit. The rewards they receive for verifying blocks on the Bitcoin blockchain were cut by 50% in April. The total market capitalization at the time was approximately $20 billion. In the current era, only 450 Bitcoins are mined per day and the fees paid to miners remain at a cycle low of just 10 BTC ($946,000) as of November 27, according to Glassnode data.

This means they need to diversify their revenue streams or produce bitcoin at a lower cost than the spot price (currently around $96,000).

It’s a challenge that will become increasingly difficult. Mining difficulty, which measures how difficult it is to produce a blockchain block, is expected to increase another 3% at some point in the coming days.

The mining difficulty, which is already well over 1 trillion, is automatically adjusted every 2016 blocks or approximately every two weeks. The higher the difficulty, the more difficult and expensive it is for miners to generate new blocks.

The crux of the problem is the soaring hashrate, which has remained above 700 EH/s (exahash) per second for over a month. Hashrate is the computational power required to mine and process transactions on a proof-of-work blockchain such as Bitcoin.

According to Glassnode data, the hashrate is currently at 726EH/s on a 7-day moving average, and has been hitting steady highs and lows since mid-year.

In 2024, many miners will diversify their revenue streams by turning to the AI ​​and high-performance computing (HPC) industries, which are seeing a surge in demand for locations that can host the necessary computing power.

One example is IREN (IREN), whose stock price surged 30% on Wednesday on renewed interest in AI.

Other companies, such as MARA Holdings (MARA), are leveraging Bitcoin storage to increase their Bitcoin balance sheet holdings. As of November 27, MARA had added an additional 703 BTC after selling $1 billion 0% convertible bonds to raise funds. The company currently owns a total of 34,794 BTC.

CoinShares Valkyrie Bitcoin Miners ETF is a publicly traded proxy product for miners. The stock is up 60% year-to-date, underperforming Bitcoin’s 113%.