Bitcoin mining stocks performed dully in March, with small moves here and there following BTC’s price movement. While it is encouraging to see most stocks hold on to their impressive January gains, Bitcoin’s price action will be crucial to these stocks’ short- to medium-term performance.
In addition, the expansion of the public Bitcoin mining sector in the US continues, as US miners reported one of the largest ASIC imports in January 2023. The delivery of new machines and an increase in the price of Bitcoin (BTC) led to a surge in the network. hash rate to new all-time highs. Miners’ income, however, was reduced by the increasing difficulty of the network.
Mining stocks are in wait and see mode
Despite Bitcoin’s recent 18% rally, the subdued returns of most mining stocks can be attributed to uncertainty surrounding the sustainability of Bitcoin’s price rally and increasing competition in the mining industry. He Hash Rate Indexa proxy for Bitcoin mining stocks, rose 10% in March, going from 1,929 to 2,141 points.
The median monthly gain in the top 10 mining stocks is 0.30%, with an average of 5.21%. Riot Platforms and Cipher Mining led monthly gains across the sector with an increase of 28.64% and 24.34%. CleanSpark, Inc. and Bitfarms Ltd. were the worst performers, with negative moves of 6.52% and 5.79%.
Average Q1 2023 gains across the top ten Bitcoin mining stocks are 128%. These stocks generated the majority of their first-quarter 2023 earnings in January. The following months, February and March, saw subdued performance from most mining company shares.
The Marathon Digital stock chart perfectly illustrates the price action across the industry, with a high candle in January, followed by small moves in the coming months.
Currently, mining companies are focused on expanding and sustaining their operations rather than profits. Marathon Digital increased its mining capacity by 30% in February. The company’s aggressive expansion will increase its production capacity from 9.5 EH/s to 23 EH/s by mid-2023.
At the same time, the Canadian mining company Hut 8 Mining Corporations Announced a merger with US-based Bitcoin Corp to combine their resources and weather the industry-wide downturn.
Network hash rate skyrocketed as new ASICs flooded the market
The Bitcoin network hash rate increased to an all-time high of 348 exahash per second (EH/s) from 320 EH/s in the last week of March.
Miner revenue increased by around 30% after the recent rise in BTC price, rising from $65 per petahash per second (PH/s) per day in Q4 2022 to around $85 per PH/s per day in the first quarter of 2023. However, the price of Bitcoin jumped more than 60% during the same period.
The increase in the price of Bitcoin is only part of the reason behind the increase in the hash rate. The discrepancy in the income of miners can be attributed to the increasing difficulty of mining. It was mainly due to the delivery of new machines throughout the United States, which increased the power and difficulty of processing the network.
In January, American miners reportedly imported 1,555 tons of machines, which has pushed the network hashrate to its current peak.
Related: Crypto Mining in 2023: Is It Still Worth It? See market talks
The increase in the network hash rate has limited miner revenue, which may negatively affect miner revenue if BTC prices were to drop from here.
There is a chance that the network hashrate will stabilize around current levels. The MinerMag report added:
“If there is no major increase in gross shipment weight in the remainder of March and into April, the bitcoin network hashrate growth rate may gradually decrease.”
Bitcoin price performance will continue to play an important role in the growth of the mining sector, but the price of BTC must maintain its current level or rise for positive income and a continued uptrend in public stocks.
The views, thoughts and opinions expressed here are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
