Crypto mining stocks have surged after a depressing year for the industry, where public crypto miners faced $4 billion in liabilities. As Bitcoin hits above the $21,000 mark for a multi-month high, crypto mining stocks have also enjoyed some positivity.
Many crypto mining stocks have shown their best monthly performance after a year of dire market conditions, and has given hope to miners who had to sell their mined assets to boost their liquidity.
During the first two weeks of 2023, Bitfarms, a leading BTC mining company, recorded a 140% surge in prices. Joining the positive market action are Marathon Digital Holdings with a 120% jump, and the MVIS Global Digital Assets Mining Index is up by 64% this month.
The increased price of Bitcoin has also increased the Luxor Hashprice Index by 21% this year. The Luxor Hashprice Index is a prediction tool that quantifies the amount a miner might make from the processing power used by the Bitcoin network.
While many mining companies either invested in expansion, with others going public after 2021’s bull run, 2022’s crypto winter exposed several vulnerabilities and lack of proper structuring in these very firms – causing some to file for bankruptcy, such as leading BTC miner Core Scientific.
In 2021’s bull market, the Bitcoin mining industry significantly increased their borrowing, but then soon met negative outcomes upon the upcoming bear market. Due to bullish behaviour, the public Bitcoin mining industry owes more than $4 billion, with the top 10 debtors of Bitcoin mining collectively facing nearly $2.6 billion in liabilities.
On a happier note, BTC’s recent price jump has also positively impacted Bitcoin-based exchange-traded funds (ETFs) to outperform assets listed on the traditional equity ETF market – taking leading positions on performance charts for January 2023.
Crypto ETFs have been introduced to bring crypto to mainstream adoption, but progress has been hindered due to bear market conditions and unfortunate circumstances in 2022. According to ETF.com, four of the top five worst-performing ETFs in the United States were crypto-related, while Australia’s top two worst-performing ETFs were also crypto-related.
Meanwhile, Valkyrie’s Bitcoin Miners ETF (US Nasdaq: WGMI) shocked market watchers last week as WGMI was up 73.1% year-to-date (YTD) over the new years. However, context notes that since its inception, WGMI lost 72.9% of its value (including its current gains), with experts noting that WGMI is an ETF to keep watch on for price rotations and earning expectations.