After the Launch of Bitcoin ETFs, Miners Face Challenges

Following their strong performance relative to BTC last year, Bitcoin miners now appear to be stagnating compared to the digital currency.

sevval02/03/20241 Mins read409

Crypto News– Since the launch of Bitcoin ETFs in January, the price of BTC has soared over the past 50 days. However, companies involved in mining the leading cryptocurrency haven’t shared the same level of enthusiasm as investors. Yet, there’s one notable exception.

After the Launch of Bitcoin ETFs, Miners Face Challenges

Shares in several publicly traded mining firms have either remained stagnant or declined in 2024. For instance, Riot Platforms (RIOT) has seen a decrease of 6.2%, while Iris Energy (IREN) has experienced an 11% drop. Even mining giants like Bitfarms (BITF) and Marathon Digital (MARA) have seen relatively modest appreciation, with increases of only 5% and 17%, respectively.

In stark contrast, the price of BTC has surged by 42% year-to-date, with BlackRock’s iShares Bitcoin Trust (IBIT) climbing 35% since its launch. This discrepancy is unusual considering the typically close relationship between Bitcoin’s price and the business model of mining firms. These companies invest in costly machinery and power to secure a steady supply of new BTC issued by the network.

Given that mining firms receive payouts denominated in BTC, their revenue in terms of dollars naturally rises in tandem with Bitcoin’s price. Currently, miners earn 6.25 BTC with each Bitcoin block, generated approximately every 10 minutes on average.

However, with the impending Bitcoin halving scheduled for April, the reward per BTC is set to halve permanently to 3.125 BTC per block. Analysts from firms such as JPMorgan suggest that this halving could potentially drive smaller, less efficient miners out of business.

Isaac Holyoak, Chief Communications Officer of CleanSpark, stated to Decrypt, “There has been a healthy pullback in the miner category over the last few days. But prior to that, mining stocks really front-ran the recent Bitcoin price increase—almost all miners were well ahead of Bitcoin.“

“We are seeing a bit of stabilization across the industry as Bitcoin and mining stocks return to parity,” he added.

Sources:decrypt

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sevval

Şevval has been actively writing since 2022 and is a third-year mathematics student at Ankara University. Her interest in writing is shaped particularly around innovative technologies such as Web3, artificial intelligence, and blockchain. She closely follows developments in these fields and aims to convey complex topics to readers in a clear and engaging manner. She enjoys combining her mathematical knowledge with technology to create content and strives to raise awareness about the digital world of the future.

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