The recent Bitcoin recovery has been a welcome relief for miners after a long winter that was accompanied by huge losses in the mining industry. The Bitcoin price rally has also benefited crypto mining stocks, which have seen the best performance in the last year.
Public crypto miners incurred up to $4Billion in liabilities during the bear market of 2022 due to low profitability. Many miners, who were struggling to stay afloat, turned to selling their coins to increase liquidity.
Bitfarm and Others Record Long-Term Highs in Mining Stocks
With the BTC price rebound, miners experienced relief for the first two weeks in 2023. Bitfarms is among the top gainers. recorded a 140% rise In the first 14 days January.
Marathon Digital Holdings Inc. was next with a 120% increase in mining stocks. Hive Blockchain Technologies Limited experienced an increase in its stock to almost double its original value within the first two week of the year.
MVIS Global Digital Assets Mining index In January, the number of people who were ill was up 64%. Luxor Hashprice Index The rate of increase was 21% The Luxor Hashprice Index quantifies possible miners’ profit based on the processing power consumption in the Bitcoin network. These indices are showing a substantial increase partly due to the rise in mining rewards resulting from the Bitcoin price rally.
Private mining companies were forced to make their stock shares public due to the crypto bull run of 2021. Many Bitcoin mining companies borrowed large sums of money to expand during the bull market in 2021, hoping that they would be able to make a profit. Many invested large amounts in equipment purchases and expanding their mine infrastructure.
These firms were made vulnerable by the crypto winter of 2022, which led to some financial difficulties. Their financial standings were negatively affected by the bear market in 2022. The report shows The public Bitcoin miners have over $4Billion in liabilities, while the highest BTC mining debtors collectively owe almost $2.5B.
These enormous liabilities combined with high energy cost impacted these businesses’ operations in winter when profits were low. Most of them struggled to maintain minimum operational standards, while some couldn’t keep up with production costs. Core Scientific, one of the most prominent Bitcoin mining companies, was forced to declare bankruptcy.
Spike In Bitcoin Mining Stocks Raises BTC ETFs Performance
Miners have been pleasantly surprised by the recent rebound in BTC’s price in January. The once-dismal crypto mining stocks just hit new all-time highs. These performances have also affected BTC exchange-traded fund (ETFs) performance. BTC ETFs outperform most equity ETFs, according to data.
After enduring turmoil for a year, ETFs were able to regain top position on the performance charts in January 2023. Valkyrie’s Bitcoin Miners ETF The equity ETF market has seen a 40% increase in WGMI’s performance to date.
Bloomberg senior ETF analyst Eric BalchunasAccording to, the Valkyrie Bitcoin Mining ETF was highly dense with investments in only 20 companies, including Bitfarm, Argo Blockchain, and Intel.
The WGMI ETF was listed on the Nasdaq market in February 2022 but didn’t include direct BTC investment. Instead, at least 80% of its net assets offer Bitcoin exposure through securities. The 50% profit from BTC mining is the company’s main source of income. Valkyrie invested 20% of the remaining assets in companies that have large Bitcoin holdings.
Due to the long bear market, crypto ETFs did poorly in 2022. Things are now back to normal, as Bitcoin recovers its lost ground. BTC trades at $21,248 per hour, a price change of 24 hours.
Pixabay/ WorldSpectrum Featured Image, Charts from Tradingview