Bitcoin rally powers mining stocks higher

Crypto mining stocks are performing well over a five-day period following a rise in digital asset valuations as mixed operational cost outcomes threaten sustainability

article-image

Mindscape studio/Shutterstock, modified by Blockworks

share

When digital asset valuations surge, crypto mining stocks naturally benefit, much like other commodity producers.

Data shows that major firms including Marathon Digital (MARA), Bitfarms (BITF) and Riot Platforms (RIOT) are posting double-digit gains over the past five days, between 17% and 19%.

Speculation for crypto mining stocks has been fueled by the crypto market rally at the beginning of the week, which saw the price of bitcoin (BTC) cement a new yearly high above $35,000.

Miners faced significant challenges last year attributable to rising electricity costs, the Ukraine-Russia conflict and falling crypto prices — sending respective share prices tumbling.

In the face of those challenges and by the beginning of this year, miners managed to recover substantial losses in their valuations by August — clawing back some 150% to 200% in year-to-date terms.

As a result, over the past 12 months, MARA has exceeded its earnings per share (EPS) estimate in 25% of instances, whereas the broader crypto mining industry has outperformed the EPS estimate 61.8% of the time during the same timeframe, TipRanks data shows.

BITF and RIOT have also managed to beat similar EPS estimates leading to a rush of new investments in the wake of the crypto industry’s rising valuations.

Operating headwinds

It comes as the spot prices for existing bitcoin ASICs continue to set all-time lows, bitcoin mining consulting firm BlocksBridge noted in its weekly miner note.

Cheaper mining equipment is helping to drive down some operational costs in the face of bitcoin’s increasing hashrate — a sign of heightened competition amongst miners, Blockworks was previously told.

While miner profitability took a hit last month due to fresh local highs in those hash rate figures, it appears the sector is retaining resiliency.

Various previous-generation models, which offer a hash rate between 25 and 38 J/TH — including the Antminer S19, Avalon 1326, and WhatsMiner M30S+ — are now priced below $10 per TH/s, BlocksBridge said.

Still, it remains to be seen whether miners can sustain their good fortunes in tandem with rising operational costs.

According to data from the US Bureau of Labor Statistics, electricity prices rose 1.1% from the month of August through to September, putting further strain on households and businesses.

However, on Monday, US-regulated digital asset services firm BitOoda noted in its weekly report Coal plants need to secure fuel a year in advance and are now accumulating more coal than they can manage. 

Current coal stock levels are high compared to recent years, despite a 29 gigawatt reduction in coal capacity since 2020. This could put downward pressure on power prices in the US if plants have to operate uneconomically to deplete excess coal, BitOoda said.

“A mild winter would likely result in lower prices with coal stocks at those high levels,” the digital asset services firm said.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Icon.png

Research

Osmosis thrived in H2 2023 on the back of increased DeFi activity deriving from recently launched Cosmos-related projects and better market conditions. With new value accrual mechanisms for the native token, Osmosis is well-positioned to continue its strong performance in 2024.

/

article-image

Though the opposing flow trend is likely to slow over time, industry watchers note, bitcoin fund assets could one day eclipse the $90 billion gold ETF space

article-image

Celestia had the first mover advantage. EigenDA has staked ether. What sets Avail apart?

article-image

Bitcoin moved 1% higher Monday morning in New York, Matrixport analysts say $62,000 could happen next month

article-image

It’s hard to believe right now that crypto — even with all of its flexibility and massive capabilities — could ever be like cash on the internet

article-image

Michael Saylor announced Monday morning that MicroStrategy bought 3k more bitcoin after the X account was compromised over the weekend

article-image

Plus, Pudgy Penguins grows its brand and a group of Autoglyphs sell for $14.5 million