Core Scientific, which is one of the largest publicly traded crypto mining companies in the U.S., sold nearly all its bitcoin in June. CEO Mike Levitt tells CNBC that just like any other business, bitcoin miners need to pay their bills.

“We mine and earn or produce bitcoin, but our costs, expenses, and liabilities are in dollars,” said Levitt.

It’s still profitable to mine bitcoin, Levitt says, with around 50% margins across the industry. That’s down from 80% margins at its peak.

Last month, Core sold 7,202 bitcoin at an average price of $23,000. Levitt tells CNBC they invested the proceeds of approximately $167 million primarily into growth-oriented activities, including new ASIC servers and additional data center capacity for their self-mining and colocation businesses.

But they also deployed some of that capital to repay debt and to help settle five years of employee stock grants.

Long-term, Levitt is optimistic because there’s tremendous positive operating leverage in the business. Over certain levels, every dollar increase in the price of bitcoin is 100% operating income to bitcoin miners.

“We would all be cheering loudly if bitcoin were to get back to $35,000, $40,000. There is no doubt about that,” he said.

But productivity per unit of electricity also matters, and when prices are low, large-scale miners like Core Scientific tend to face less competition from hobbyists and small operations.

“As prices fall, the global hashrate — or the competition for the production of bitcoin — decreases, as less efficient miners come off the network,” explained Levitt.

The hashrate is a term used to describe the computing power of all miners in the bitcoin network, and it is down 15% in the last month. That is ultimately a good thing for the large-scale miners who can afford to weather the downturns.

As less efficient miners come off the network and global hashrate declines, machines that continue to mine bitcoin get more productive.

“And thus, the cost of energy, if you will, per bitcoin produced, goes down,” said Levitt.

This content was originally published here.

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