The rebound in Bitcoin price has rubbed off on mining stocks as well. Crypto-mining stocks have experienced their best monthly performance in a year. Miners, who had to sell significant amounts of their mined coins in order to boost liquidity last year, were also relieved by the surge in mining stocks.
Bitfarms and Marathon Digital Holdings Inc. both experienced 140% increases in the first two weeks of January. During the same time period, the stock value of Hive Blockchain Technologies Ltd. nearly doubled, while the MVIS Global Digital Assets Mining Index increased by 64%.
The Luxor Hashprice Index, which attempts to quantify how much a miner might earn from the Bitcoin network’s processing power, has increased by 21% this year. This is due in part to higher rewards as the price of Bitcoin rises.
Several mining companies went public during the 2021 bull run, while others invested heavily in equipment and expansion. However, a prolonged crypto winter in 2022 exposed many of these mining firms’ vulnerabilities and lack of proper structuring.
The Bitcoin mining industry borrowed significantly more during the 2021 bull market, which had a negative impact on their financial standing during the subsequent bear market. The top ten Bitcoin mining debtors collectively owe nearly $2.6 billion, while public Bitcoin miners owe more than $4 billion in liabilities. Leading BTC miners such as Core Scientific declared bankruptcy by the end of 2022.
The January BTC price surge not only helped struggling crypto mining stocks reach new yearly highs, but it also helped Bitcoin-based exchange-traded funds (ETFs) outperform the majority of the traditional equity ETF market.