![]() However, with limited access to capital, M&A will likely become more pronounced among cash-strapped miners to fund their growth or production goals. In a relatively young industry with rising competition, expansion is one of the keys for miners to remain profitable. “In this environment, I think you should expect to see a certain amount of consolidation in the mining space,” said Marathon’s Thiel. Such a down cycle will also change investors' appetite for risky assets, limiting access to capital for public and non-public miners. The miners who have access to cheap power and newer, more energy-efficient mining computers, will be able “rise to the top, while less efficient miners may feel some pain,” said CleanSpark’s Schultz. To be sure, a prolonged bear market will have some negative impact on the market. ![]() One reason for this is that the current down market has more institutional investors investing in crypto-linked stocks, which reduces volatility over the longer-term, Thiel said. In prior bear market cycles, there was a 70% decline in the price of bitcoin in 2013 and about an 85% drop in 2018. Moreover, the recent correction seems to be less severe than previous major selloffs, according to Fred Thiel, CEO of Marathon Digital (MARA), one of the largest publicly traded miners. “That seemed to be the equilibrium level whereby the highest cost miners became unprofitable and were forced to shut down their operations, and lower cost miners remained operating profitably,” Bulovic noted. Foundry is a subsidiary of Digital Currency Group, which is the parent company of CoinDesk. During that bear market, hashprice hit a floor of $0.07/TH/day according to Juri Bulovic, Head of Mining at Foundry. While the miners that have higher costs are likely making less profit at current bitcoin prices, those profits are still not as low as in the most recent bear market that began in 2018. “The current price of ~$30k does not have a significant impact on the economics of bitcoin mining given that the cost to mine a bitcoin for most industrial scale mining operations in North America is much less than that,” Schultz said. However, miners remain unfazed by the crypto market rout as most are still making healthy profits even as bitcoin hovers around $35,000 levels. Meanwhile, hashprice, a measure of miners' daily revenue per terahash of computing power ($/TH/Day) fell near $0.18 from its November peak of around $0.40/TH/day, according to data from Hashrate Index. “Miners that are more dependent on equity may struggle now because the markets aren’t as bullish as they were,” said Matthew Schultz, executive chairman of bitcoin miner CleanSpark (CLSK).įurthermore, the Bitcoin network’s hashrate and difficulty recently reached all-time highs, making it harder for miners to earn rewards for validating transactions. Most recently, bitcoin miner Rhodium Enterprises postponed its IPO that valued the company up to $1.7 billion due to market turbulence. Moreover, with fear ruling investor sentiment, the access to capital that miners enjoyed last year, has somewhat dried up, particularly for the companies that have recently gone public or are planning to do so. Read more: Fed Preview: How Rate Hikes Could Stimulate Demand for Stablecoins The miners and overall market saw some relief heading into Wednesday’s Fed policy statements. The slide coincided with the price of bitcoin, the largest crypto currency by market capitalization, at one point falling more than 50% since its November all-time high. Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF, an exchange traded fund with heavy exposure to miners, has fallen more than 60% since its November peak. And given the recent carnage in bitcoin and other cryptocurrency prices, some of the stocks have lost more than 50% of their value since their peak last year. However, industry participants remain optimistic about the sector’s outlook and see the potential for consolidation among the miners.Īmong the crypto-linked stocks, crypto miners are most exposed to the price movements of the digital assets they mine. Federal Reserve prepares to raise interest rates. ![]() The stocks of publicly traded crypto miners have slumped amid the recent sell off in bitcoin and the broader market as the U.S.
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