Stocks of major Bitcoin mining companies have declined amid ongoing volatility in the cryptocurrency market. Key players like Marathon Digital and CleanSpark have shown significant drops in their stock values.
Decline in Mining Companies' Stocks
The stock of the largest mining company, Marathon Digital, dropped by 2.3% on Aug. 28, marking a 38% decline from its peak this month. CleanSpark's stock fell by 1.75% to $11.25, while Riot Platform dropped by over 1.4%. Other major Bitcoin mining companies like Argo Blockchain, Core Scientific, TeraWulf, and Cipher Mining also pulled back.
Impact of Bitcoin Halving
Most of these stocks remain in a deep bear market after falling by over 20% from their highest level this year. Their performance is closely tied to Bitcoin’s price action since March. After peaking at a record high of $73,800, Bitcoin has retreated by 18.78% to $60,000. Generally, Bitcoin miners thrive when BTC is rising and vice versa. Additionally, these companies have struggled due to the Bitcoin halving event in April, which has pushed the hash rate higher. Most of them have mined fewer Bitcoins than they did before the halving event. Marathon Digital mined 894 coins in March and 692 in July. Similarly, CleanSpark mined 806 coins in March and 494 in July, while Riot Platforms produced 425 coins in March and 370 in July.
Future of Mining Companies' Stocks
These companies are handling the crisis differently. Leading Canadian miner Bitfarms acquired rival Stronghold Digital this month. Riot Platforms has also set its sights on Bitfarms and has become one of its top shareholders. Marathon Digital has started mining Kaspa (KAS) and has continued accumulating Bitcoin holdings. Earlier this month, it purchased Bitcoins worth $249 million, becoming the second largest corporate BTC holder after MicroStrategy. The price of Bitcoin mining stocks will largely depend on Bitcoin’s price action. In the short term, options market data shows that the Aug. 30 expiry has 93% of all call options being Out-of-the-Money, with a strike price above $60,000. However, in the long term, the options market anticipates a potential rally to $90,000 by the end of the year. Bitcoin continues to see strong inflows in the ETF market. While funds suffered outflows of $127 million on Aug. 27, they have added over $17.95 billion this year. Blackrock’s ETF has over $22.2 billion in assets while Fidelity’s fund has $11 billion and is about to surpass Grayscale’s Bitcoin Trust.
The future of Bitcoin mining stocks will largely depend on various factors, including Bitcoin's price movements, Federal Reserve interest rate decisions, and institutional demand. If these catalysts align, there is a high chance that most Bitcoin mining stocks will bounce back.
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