Bitcoin Mining Stocks Surge Amid Bitcoin Rally
By Kapil Rajyaguru
The rise in the price of Bitcoin this year has led to rise in stocks such as cryptocurrency broker Coinbase Global and MicroStrategy, a software company that has invested heavily in the token, something that has boosted Bitcoin miners.
There is a direct co-relation between rise in price of bitcoin and the surge in bitcoin mining stocks.
Bitcoin price gained around 68% in the first quarter of 2023 and it has roughly increased around 7% in the second quarter of 2023. However, if we have a look at bitcoin’s year to date performance, it has increased by 84.3%.
Bitcoin miners have done even better. From being among the most beaten-down names in crypto during 2022, to the biggest winners of 2023 it’s a kind of revelations that left many astonished. Riot Platforms (RIOT) has gained 248% so far in 2023, while Marathon Digital (MARA) is up 305%.
If you are not convinced with that part of story, then what follows next will definitely make you wonder as to why the sector is buzzing. According to crypto analytics firm Coin Metrics, Bitcoin miners earned $184 million from transaction fees between April to June amid Bitcoin Ordinals fervor.
It makes sense because miners stand at the heart of a process called “proof of work,” which runs the Bitcoin network. They use computers running on powerful chips—often warehouses of computers—to solve complex puzzles in a process that facilitates securing the network and processing transactions. Payments are in Bitcoin. The difficulty level of the puzzles, which affects how much energy is required to solve them, is largely determined by how many miners are participating in the process.
Energy accounts for between 90% to 95% of bitcoin mining costs and plays an extremely critical role in determining profitability for the cryptocurrency miners.
The average cost of mining single bitcoin is at least $17,000 versus the $5000 to $10000 range a year ago, according to Bitcoin mining data resources Hashrate Index and Luxor.
As of July 7, 2023, the price of bitcoin is over $30,000, so miners make profit of over $13000 per bitcoin.
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