Cryptocurrency Mining Stocks Hit Yearly Highs After Bitcoin Bounce

The bitcoin (BTC) price rally to multi-month highs has also positively affected miner stocks. Many cryptocurrency miner stocks posted their best monthly performance in a year. The rise in miner shares has also relieved struggling miners who had to sell a significant portion of their mined coins to increase liquidity in 2022..

Bitfarms – a major BTC mining company – posted a 140% rise in the first two weeks of January 2023, followed by Marathon Digital Holdings with a 120% rise. Hive Blockchain Technologies saw its share value nearly double in the same period, while the MVIS Global Digital Assets Mining Index is up 64% in the first month of the new year..

The Luxor Hashprice Index, whose goal is to quantify how much a miner can earn with the processing power used by the Bitcoin network, has risen 21% this year. This partly reflects higher rewards due to the increase in the price of bitcoin.

The 2021 bull run led several mining companies to go public, while others invested heavily in equipment and expansion. Nevertheless, the prolonged crypto winter of 2022 exposed the vulnerabilities and lack of proper structuring in many of these mining companies.

The 2021 bull market saw a significant increase in the indebtedness of the bitcoin mining industry, which had a negative effect on its financial situation during the subsequent bear market.. Public bitcoin miners owe more than $4 billion in liabilities, while the top 10 bitcoin mining debtors collectively owe nearly $2.6 billion. In late 2022, major BTC miners like Core Scientific filed for bankruptcy.

Liabilities of public Bitcoin mining companies. Source: Hashrate Index

BTC price surge in January has helped struggling cryptocurrency mining stocks hit new yearly highsbut it also helped bitcoin-based ETFs outperform most traditional equity ETF markets.

Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.

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