March 24, 2023

The Bitcoin mining industry has now grown to the point where it can be measured against other similar industries that have been around for longer. However, Bitcoin mining companies operate very differently from these established commodity companies. The most obvious is the way these companies handle revenue in terms of managing costs, which varies widely between mining companies and other commodity-based companies.

Bitcoin miners spend too much

It turns out that public Bitcoin miners spend most of their revenue on administrative costs. Looking at the spending patterns of other established commodity companies, Bitcoin miners spend a significant portion on management.

The average percentage of revenue Bitcoin miners spend on overhead costs is around 50%, although this is an industry-wide average. Some have been able to reduce their administrative expenses, while others have been shown to spend almost all of their income on it.


BTC mining firms spend more of their revenue | Source: Arcane Research

Comparisons between Bitcoin miners, gold mining, and the oil and gas industry show huge differences. In the oil and gas industry, the average expenditure on administrative costs reaches 2%, while in the gold mining industry it reaches 3%.

Why do they spend so much money?

Bitcoin mining companies spend so much on management in part because they are still young. Unlike their peers in the gold mining and oil and gas industries, they don’t have the time to strike a balance when administrative costs are a fraction of revenue.

Marathon Digital is a miner that uses almost 100% of its revenue. Last year, the company reported revenue of $266 million, of which $259 million was in management. The company offers a generous stock-based compensation plan to its senior employees, and since those executives have been able to meet all of their growth targets for the year, the company has had to spend $161 million in stock-based compensation for its executives.

Bitcoin Price Chart by

BTC trending above $19,000 | Source: BTCUSD on

On the other hand, some miners have been able to reduce their administrative expenses. Since 2021, Argo Blockchain has been able to reduce its administrative costs to 16% of its total revenue, one of the lowest in the space.

Another reason is that these companies are still young and have little stakeholder oversight of the companies. And since this is a capital-intensive industry, they are able to pay these handsome executive stock compensation. However, as the industry becomes more mature, more shareholder oversight is expected, limiting how much revenue is spent on administrative costs.

Featured image from TechSpot, charts from Arcane Research and

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