• Bitcoin miners are starting to emerge from the brutal crypto winter, which saw several bankruptcies and fire sales.
• The rally in bitcoin’s price is providing some relief for the miners, although they may not be completely out of the woods yet.
• Lower energy costs have also given miners some breathing room, with shares of publicly traded bitcoin mining firms outperforming BTC so far this year.
Bitcoin Miners Emerge From Crypto Winter
The bitcoin mining industry appears to be getting back on its feet after a long crypto winter that saw major bankruptcies and fire sales. Even though mining economics have improved only marginally as bitcoin trades above $20,000, capital is starting to flow into the sector once again. Meanwhile, lower energy costs in the last few months have also given miners some breathing room. Shares of publicly traded bitcoin mining firms have outpaced bitcoin this year, with Core Scientific (CORZQ), Digihost and Cipher Mining (CIFR) leading the pack with 693%, 225% and double digit percentage growth respectively.
Investor Sentiment Driven by Price Action
„This shows that investor sentiment is still largely driven by BTC price action rather than mining fundamentals,“ Ethan Vera, chief operating officer at Luxor Technologies – a crypto mining-services firm – said. A composite index of public mining rig manufacturers, foundries and miners compiled by Luxor is up by 52% so far this year compared to bitcoin’s 44% rise. However, stock prices still have a long way to go compared to where they were last year before the crypto winter hit hard.
Reasons for Improved Prospects
The rally in bitcoin’s price is providing much needed relief for miners who are trying to survive in an increasingly competitive environment where survival depends on economies of scale and access to cheap electricity sources. Lower energy costs in recent months has also helped give miners some breathing room as they look towards more sustainable operations going forward.
Publicly Traded Bitcoin Mining Firms Outperforming BTC
Shares of publicly traded companies active in the space have significantly outperformed BTC so far this year: Core Scientific (CORZQ) has seen its equity grow 693%, followed by Digihost whose shares have risen 225%. Meanwhile shares of Cipher Mining (CIFR), DMG Blockchain (DMGI), Bitfarms (BITF), Iris Energy (IREN) and Bit Digital (BTBT) all doubled or more during the same period.
While there are signs that things may be improving for Bitcoin miners after a brutal market downturn last year, it remains unclear whether they will return to their pre-winter levels any time soon as investor sentiment continues to be largely driven by price action rather than underlying fundamentals such as access to cheap electricity sources or economies of scale advantages over competitors.