Bitcoin Mining Stocks Overcome 2022 Setback, Doubling in Value

In an impressive turnaround, U.S. listed Bitcoin mining stocks have seen more than a two-fold increase this year, reports Bernstein, a brokerage firm. The boost comes on the heels of 2022’s devastating cryptocurrency crash, setting a narrative of resilience and recovery.

The surge in value is attributed to two primary drivers, according to Bernstein’s research report. Initially, the steady rise in Bitcoin‘s price, bolstered by a positive shift in sentiment following institutional ETF filings from heavyweights like Blackrock and Fidelity, played a significant role. Moreover, some Bitcoin miners have begun exploring high-performance computing and artificial intelligence (AI) sectors, a move described as a “revenue diversification strategy.”

“This is a unique game of survival where the best-in-class miners with low costs and conservative debt profiles can survive, consolidate capacity and market share, to earn hyper-normal profits when bitcoin prices exceed the cost of production,” wrote the team of analysts led by Gautam Chhugani.

Survival of the Fittest: Bitcoin Miners Navigate Market Challenges

However, the volatility of the crypto market isn’t forgiving to all. Bernstein points out that miners burdened by high debts fail to weather “crypto winters,” resulting in their downfall. The recent bankruptcy of Core Scientific (CORZQ) was cited as an example.

The research report indicates that the first wave of market consolidation has concluded, with the surviving miners now expanding capacity in preparation for the anticipated Bitcoin halving. This event, which reduces mining rewards by 50%, typically propels the BTC price upwards. The next such episode is projected around April 2024.