Author: FinTax

Frequent Industry Volatility: How Cryptocurrency Mining Companies Respond to Challenges

The cryptocurrency mining industry in 2025 appears to be vastly different from its previous state.

In 2021, mainland China imposed a complete ban on cryptocurrency mining activities, forcing a large number of mining machines to relocate and abruptly altering the global hash rate landscape.

In 2022, Ethereum completed its transition from Proof of Work (PoW) to Proof of Stake (PoS), marking the end of traditional mining for one of the largest public blockchains.

In 2024, Bitcoin experienced its halving event, tightening mining profitability and compressing profit margins year-over-year.

Under the combined pressures of policy, technology, and market dynamics, cryptocurrency mining companies have had to accelerate their transformation and seek new pathways for survival and growth. In response, these companies have undertaken various external initiatives: upgrading ASIC hardware to pursue higher hash rate efficiency; rebranding and extending business operations to transition from ‘miners’ to ‘digital infrastructure providers,’ entering the AI and high-performance computing markets; accessing capital markets and issuing hash rate derivatives to enhance financing capabilities and revenue stability; as well as signing long-term power purchase agreements (PPAs) and introducing cooling and maintenance optimization technologies to address energy cost pressures, among others. Meanwhile, mining pools have continuously innovated in hash rate allocation mechanisms, settlement transparency, and derivative services to solidify their user base and respond to increasingly fierce competition.

While these transformations have undoubtedly effectively mitigated the impact of external risks, they cannot alter one fact: the external environment remains inherently uncertain, with policies potentially changing overnight, and energy prices and cryptocurrency values fluctuating at any time. At this juncture, it may be prudent to shift some focus from external factors to internal ones, attempting to unlock growth potential within the enterprise. Particularly, by optimizing internal financial and accounting management capabilities, strengthening compliance and transparency, mining companies and mining pools can build their own competitive moats amidst intense external competition, stabilize current operations, and lay a solid foundation for earning long-term trust in the capital markets.

Overview of Accounting Management Pain Points for Mining Companies and Mining Pools

In reality, most cryptocurrency mining companies and mining pools face several challenging issues in the realm of internal accounting management, such as:

Profit misstatement: Hashrate output is distributed across multiple mining pools and accounts, while costs such as electricity, depreciation, and site maintenance are scattered among different entities, making it difficult to match each transaction. As a result, apparent profits seem to grow, but the true gross margin and net profit margin remain unclear, leaving corporate decision-making without solid grounds.

Cross-border financial fragmentation: As hashrate migrates to regions like North America, Central Asia, and the Middle East, accounting standards vary across jurisdictions, and ledgers are dispersed among different subsidiaries. Consolidated financial statements are both time-consuming and prone to inconsistencies in reporting standards. When faced with external financing or regulatory audits, management struggles to produce a unified and credible financial report.

Disconnect between operations and finance: In the context of mining pools, operational systems handle hashrate allocation and user settlements, whereas financial systems often rely on manual imports or Excel processing. Data delays and information asymmetry cause frequent discrepancies between on-chain actual earnings and financial book figures, impacting internal management and undermining external trust.

Compliance and audit pressures: With increasing tax compliance requirements, companies need to provide complete and traceable transaction evidence chains. However, crypto mining enterprises often lack audit-friendly accounting systems, making it difficult to quickly verify asset ownership and cost bases. When dealing with regulators or capital markets, corporate credibility and financing capabilities may be constantly challenged.

Disconnect between management and strategy: Crypto mining enterprises tend to focus on hashrate expansion and energy cost negotiation, while internal value management is treated as a “back-office matter.” This results in finance teams being overwhelmed with reconciliations and reports, unable to serve as strategic support or help the company establish long-term transparency and credibility in the capital markets.

Building a compliance moat through optimized internal accounting management

Facing significant external volatility, if crypto mining enterprises and pools rely solely on hashrate expansion or business transformation, they will still struggle to gain true control. To move forward steadily through cycles, crypto mining enterprises and pools could consider establishing a more compliant and sustainable accounting management system. The core of this system lies in ensuring the authenticity, timeliness, and comprehensiveness of financial data, allowing it to accurately reflect operational outcomes while reducing compliance risks and providing reliable decision-making support for management.

First, profitability must become visible. Through automated data collection and reconciliation, enterprises can track each instance of hashrate output and revenue, precisely matching them with costs such as electricity, depreciation, and maintenance. The resulting gross margin and net profit margin will no longer be based on rough estimates but will instead represent verifiable outcomes, providing a solid foundation for strategic judgment. Without comprehensive statistics covering different jurisdictions, entities, and currencies, it would be difficult to form a complete financial picture, hindering management’s ability to respond promptly and accurately to financing, auditing, and regulatory demands.

At the same time, integrating operations with finance is key to improving management efficiency. Operational tasks in mining pools, such as hashrate allocation, user settlements, or fund flows, if handled manually, are often delayed and prone to inaccuracies. Real-time integration of these events with financial data will significantly reduce reconciliation costs, enhance transparency, and help win the trust of partners and the capital markets.

Furthermore, heightened compliance and audit requirements mean that companies must be able to provide traceable evidence chains. Any missing link—from original transactions to complete reports—poses potential risks. An audit-friendly accounting system enables companies to better address financial disclosure, tax inspections, and due diligence from capital markets. Ultimately, through automation and systematization, finance teams can be freed from tedious reconciliation and reporting tasks, focusing instead on higher-value activities, transforming their role from “recorders” to “growth enablers.”