Even with the recent rise in bitcoin prices, public bitcoin mining stocks started the year with better gains than those assets.
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General Mining Update
Looking at the high-level view of bitcoin holdings, we have seen a downward trend in holdings among common miners throughout 2022, from 46,930 BTC at the peak in April 2022, to 31,892 in January 2023 – a 32% decrease in 10 months. With Bitfarms, Scientific Core and North Data releasing bitcoin, ownership among public miners is now heavily concentrated in Digital Marathon, Hut 8 and Riot Platform.
The hashrate expansion trend is “only up” with common miners increasing their hashrate by 129% over the past year. This growth has been a significant driver of the overall hash rate expansion with the network hash rate recently reaching 300 EH/s and public miners making almost 25% of all hash rates on any given day. The percentage is underestimated because we exclude all common miners, such as Cipher and Terawulf.
Mining Production Update Notes
Marathon made a statement about the option to sell some of the company’s mined bitcoins, “With bitcoin production increasing and becoming more consistent, we made a strategic decision to sell some of our bitcoins, as we had previously planned, to cover some operating costs and for general corporate purposes .We intend to continue selling part of our bitcoin holdings in 2023 to finance our monthly operating costs.
In the announcement, they hinted at room for further hash rate expansion. “The company still expects around 23 EH/s of capacity to be installed by mid-2023.”
In addition, HIVE’s production update informed shareholders about the bitcoin sale, “HIVE is selling all Bitcoins obtained from our GPU mining hashrate, with a focus on HODL of green Bitcoins mined from ASICs.”
Riot Platforms announced a delayed timeline for increasing the hash rate, “Unfortunately, as a result of this damage, the previously announced goal of reaching 12.5 EH/s in total hash rate capacity in Q1 2023 is expected to be delayed. We will provide additional updates as we gain clarity more on the impact on the planned deployment schedule. In the meantime, the remaining infrastructure development at the Rockdale Facility continues to progress, with Building E now 50% complete and set to be completed this quarter, and we continue to expand at the Corsicana Facility .”
Iris Energy increased its mining capacity from 2.0 to 5.5 EH/s by using prepaid to acquire new miners.
In other general mining news, Hut 8 shared a recent merger and HODL strategy:
On February 7, 2023, Hut 8 announced a similar merger with US Data Mining Group, Inc. economic mining, highly diversified revenue streams, and industry best practices in ESG.
“We have been deliberate and strategic to achieve the HODL strategy: by building a large and unobstructed pile, we have given the option to strategically use these parts to cover operating costs instead of having to look for other financing options with less attractive terms. , “said Jaime Leverton, CEO. “I believe that selling production while focusing on closing the merger with USBTC is the right approach, as we expect to create an independent mining, hosting, managed infrastructure operation, and HPC organization in the long term.”
Hash Rate All Time High
With some help from cost-sensitive miners turning their rigs back on, the average Bitcoin hash rate of 7 days has once again broken a new all-time high, with a weekly average of 303 EH/s.
With the network’s hashrate rising to a new high, the next difficulty adjustment is expected to be +12.0%, likely to occur on February 25th.
Those who want to ratchet up the difficulty of mining will lose some of the relief that the operation has felt in the past few weeks, due to the increase in revenue denominated in USD. The miner’s income in bitcoin terms will once again drop to a new position.
As the hash rate, and subsequently the difficulty of mining, continues to stretch to high, old generation machines and inefficient operations will continue to get squeezed at the expense of more efficient business with new generation mining machines.
General Miner Performance
Public miners have been among the best performers in the equity market for years, with shares of Iris Energy leading the way with an impressive 255% gain, and shares of Bitfarms, Hut 8 and HIVE Blockchain following.
The performance of these companies against bitcoin is equally impressive as every major public miner in the basket we follow closely has exceeded the baseline (BTC) to start 2023.
In the longer term, we find that bitcoin’s performance is of a very high order, due to the ruthless competitiveness of the global mining industry, coupled with block subsidies that reduce the program that continues to occur every block of 210,000 bitcoins – approximately every four years.
Regardless of the next direction that bitcoin or the equity market more broadly takes, mining equities will continue to provide investors with volatility galore, with the right market conditions providing much of that volatility in the form of upward appreciation.
A final note
Global investors will be hard-pressed to find anything on the planet that continues to grow and grow at the same rate as bitcoin’s hash rate. The story here that has been unfolding for more than a decade is the evolution of the most powerful and decentralized computing power the world has ever seen, but most have missed the forest for the trees.
Short-term market correlation and exchange rate performance, bitcoin remains the world’s best chance to reach a global neutral monetary protocol for final settlement.
Related articles:
- The State of the Mining Industry: Survival Of The Fittest
- Time-Based Capitulation: Bitcoin Volatility Hits Historic Low Amid Market Apathy
- This Time Is No Different: Miners Are the Biggest Risk Facing the Bitcoin Market in the 2018 Cycle Repeat
- Hash Rate Hits New All-Time High: Implications For Mining Equity
- Bitcoin Hash Rate Down 17% From All-Time High