Cutting Costs and Joining Forces, Bitcoin Miners Hoping for Rebound

Miners need to survive until the 2024 bitcoin halving, which historically creates a positive imbalance between bitcoin’s supply and demand, CoinShares says

article-image

PHOTOCREO Michal Bednarek/Shutterstock.com modified by Blockworks

share

After a rocky 2022, bitcoin miners could be in for a lucrative year, at least if past market cycle patterns repeat. 

The largest cryptocurrency posted a 64% loss last year, coupled with skyrocketing electricity costs around the world and a dramatic drop in mining profitability made 2022 a bust for most of the crypto mining industry. But a rebounding market and upcoming halving cycle could be the catalysts the industry needs for a turnaround. 

The next bitcoin halving, expected in the second quarter of 2024, should create a positive imbalance between bitcoin’s supply and demand, Christopher Bendiksen, bitcoin research lead at CoinShares, said in a report Monday. 

“Historically, there has been a recurring tendency for the halvings to be closely followed by bull markets, leading to the now famed four-year bull/bear cycles in bitcoin price,” Bendiksen said. 

When market conditions are strong, miners restrict new supply by holding more bitcoin on their own treasuries, meaning the supply of newly mined bitcoin hitting the market is much smaller than the actual production amount, Bendiksen said. But when there are challenges in the market, miners are forced to liquidate their holdings. 

“Because good times in mining tend to happen during bitcoin bull markets, and bad times tend to happen during bear markets, miner hoarding behavior happens right when demand is already overpowering supply, and vice versa,” Bendiksen said. “This adds further fuel to the volatility fire, both to the upside and the downside.”

Some bitcoin mining companies have already reported a stronger start to the year. Riot Platforms increased its production 62% year-over-year last month, the company said in an unaudited report Monday. Riot reported selling 700 of its 740 mined bitcoin in January 2023, resulting in net proceeds of around $13.7 million, the company said. 

Stronghold Digital Mining, which has been publicly traded since October 2021, has paused all debt payments until July 2024, giving the firm runway for the next 18 months, the company said Tuesday. Holding off on debt payments means Stronghold can take advantage of the current distressed mining market, a spokesperson said. 

After losing nearly 98% since its Nasdaq debut, Stronghold has rallied more than 30% so far this year. Analysts surveyed by CNN Business give Stronghold a buy rating with a median price target of $2 per share, a roughly 257% increase from its current price of around $0.56. 

In yet another consolidation move spurred by the distressed market, mining companies Hut 8 and US Bitcoin Corp announced merger plans Tuesday. The two companies will be wholly-owned subsidiaries of the new Hut 8 Corp. Hut 8’s shares will be consolidated five-to-one, per the press release

“Once miners are better able to cover ongoing cash needs through mining revenue, the exacerbating effect from treasury liquidations on downside volatility is reduced, removing an ankle weight from the bitcoin price itself,” Bendiksen said. “This in turn has the potential to act as a virtuous cycle.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The goal, per Santiago Santos, is to make crypto a relatable piece of tech for people who may not even understand it

article-image

Stripe stablecoin unit aims to operate under a federal charter enabling regulated stablecoin issuance and custody services

by Blockworks /
article-image

Will TradFi make crypto better or create more problems than it solves?

article-image

Subtle decisions by risk curators saved Aave from significant turmoil

article-image

The new Rootstock Institutional unit aims to connect professional investors to Bitcoin-native yield and liquidity strategies anchored in BTC’s security layer

by Blockworks /
article-image

DOJ files record civil forfeiture against more than 127,000 BTC linked to scam activity

by Blockworks /