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…
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