Hut 8 CEO, Jaime Leverton explains how Bitcoin mining can stabilize grids, create jobs and generate tax revenues in an exclusive Davos interview.
Bitcoin Rally Pushes Crypto Mining Stocks Up – What’s Ahead?
After a year-long winter accompanied by massive losses in the mining sector, the recent Bitcoin recovery is a relief to miners. Moreover, the Bitcoin price rally has rubbed off on crypto mining stocks as they witness the highest performance in the past year.
In the 2022 bear market, public crypto miners recorded up to $4 billion in liabilities due to low profitability and stock prices. As a result, many miners who struggled to stay afloat resorted to selling their coin reserves to boost liquidity.
Bitfarm And Others Record Year-Long Highs In Mining Stocks
The first two weeks of 2023 have brought relief to miners with the BTC price rebound. Among the top gainers is Bitfarms, which recorded a 140% rise in the first 14 days of January.
Marathon Digital Holdings Inc. followed Bitfarms with a 120% surge in mining stocks. Hive Blockchain Technologies Limited also experienced a rise in its stocks to nearly double the original value in the first two weeks of the year.
MVIS Global Digital Assets Mining index rose by 64% in January, while the Luxor Hashprice Index saw a 21% increase. The Luxor Hashprice Index quantifies possible miners’ profit based on the processing power consumption in the Bitcoin network. The significant increase in these indices partly reflects an increase in mining rewards due to the Bitcoin price rally.
The 2021 crypto bull run led many private mining companies to declare their stock shares publicly. Many Bitcoin mining firms borrowed huge sums for expansion during the 2021 bull market, hoping to break even as profits come. Some invested heavily in equipment purchases and expanding their mining infrastructure.
However, the long crypto winter in 2022 made these firms vulnerable, leading some into a financial crunch. The liabilities impacted their financial standings negatively during the 2022 bear market. The report shows that public Bitcoin miners have over $4 billion in liability, whereas the highest BTC mining debtors collectively owe close to $2.5 billion.
These huge liabilities plus high energy impacted the operations of these firms in the winter when profit was low. Most of them struggled to maintain minimum operational standards, while some couldn’t keep up with production costs. As a result, leading Bitcoin mining firms like Core Scientific had no option but to declare bankruptcy.
Spike In Bitcoin Mining Stocks Raises BTC ETFs Performance
The rebound in BTC price in January is a breath of fresh air to miners. The once-declining crypto mining stocks have just reached new all-time highs. These recent performances also rubbed off on BTC exchange-traded funds (ETFs). Data shows that BTC ETFs have outperformed most equity ETFs.
After a year-long turmoil, the ETFs reclaimed top positions on the performance charts in January 2023. Valkyrie’s Bitcoin Miners ETF (WGMI) outperformed the equity ETF market with a 40% increase year to date.
Senior ETF analyst at Bloomberg, Eric Balchunas, stated that the Valkyrie Bitcoin Mining ETF is highly dense, with investments in only 20 firms, including Intel, Bitfarm, and Argo Blockchain.
The WGMI ETF was listed on the Nasdaq market in February 2022 but didn’t include direct BTC investment. Instead, most of its net assets (at least 80%) offer exposure to Bitcoin through securities whose 50% profit comes from BTC mining. Valkyrie invested the remaining 20% in companies whose large portion of held assets is Bitcoin.
Generally, crypto ETFs performed low in 2022 due to the prolonged bear market. But things appear to be returning to normal as Bitcoin reclaims lost grounds. BTC is currently trading at $21,248 in a 24-hour price change.
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Bitcoin Mining Stocks In Solid Gains As Crypto Market Rallies
Following the ongoing rally in the crypto market, the stocks of the top five leading Bitcoin mining companies have surged in value, amassing solid gains. Major crypto stocks are also rising and have recorded massive gains in recent weeks.
Though investors are still skeptical if this is genuinely the real bull run they have been anticipating, major assets in the crypto industry have been in the green for the past weeks regardless of some negative news spreading in the industry.
Top Five Bitcoin Mining Stocks Rallies
Bitcoin mining companies Riot Blockchain, Hive, Marathon Digital, Hut8, and Bitfarms have so far been in green since the beginning of this week, with each gaining at least 10% in value.
According to data from MarketWatch, Riot Blockchain (RIOT) value has seen gains of up to 43% this week. The shares saw a closing price of $6.13 in after-hours trading on Thursday, following a 14.5% increase on the same day.
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Hive Blockchain Technologies was in green yesterday. HIVE value surged nearly 40%, up by 37.6% in the last 24 hours. It closed with a trading price of $3.21, and so far, its weekly gain has amassed to about 76%.
Marathon Digital stock, with the ticker MARA, saw significant gains on Thursday and went up by 30.9%, closing the day at $6.76. The mining firm is up by 65% since the beginning of the week, according to MarketWatch.
Following its recent announcement of having mined 3,568 BTC throughout 2022 and increasing its reserves by 65% to 9,086 BTC, Hut8 Mining Corp (HUT) stock skyrocketed by 22.2% on Thursday, ending the day with a $1.38 trading price.
Bitfarms (BITF) was not left out of the ubiquitous rebound, as its share prices have been up by 73% since Monday. BITF gained 44.3% on Thursday to end the day’s trading session at $0.94.
However, despite the bullish trend with these Bitcoin mining stocks, they are still far from their peak value, given the 2022 impact on asset value.
Crypto Stocks Are On The Rise
Not only are mining firms experiencing a bullish cycle at the moment, but prominent bitcoin investor MicroStrategy (MSTR), is also up 30% since Monday morning and eventually ended Thursday’s trading session at a $208 trading price.
Coinbase’s COIN also amassed 8.6% in value yesterday and currently trades at $47.55.
Meanwhile, the global cryptocurrency market capitalization has seen massive gains over the past few days, adding nearly $100 billion to its total capitalization. Crypto pioneer Bitcoin has been printing greens since the beginning of this year, adding to the demand for mining stocks.
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