According to a research report by asset management firm Bernstein, Bitcoin mining stocks listed in the US have seen a significant rebound this year and more than doubled in value after a rough period in 2022.
Bitcoin Mining Shares Rise
The report attributes this revival to two key factors:
The positive impact of institutional exchange-traded fund (ETF) applications from big players like BlackRock and Fidelity and increasing sentiment towards Bitcoin, and some miners exploring revenue diversification strategies in high-performance computing and artificial intelligence (AI).
The research report highlights the unique dynamics of the Bitcoin mining industry, describing it as a “survival game”.
In this game, miners with a low-cost and conservative debt profile are positioned to develop and consolidate their market share by making substantial profits when Bitcoin prices exceed the cost of production.
On the other hand, weaker miners with high debt are unable to withstand tough market conditions and often face bankruptcy, as seen in the latest example from Core Scientific.
Bernstein states that the first phase of consolidation has already taken place and that the surviving miners are now expanding their capacity to prepare for the next Bitcoin halving event scheduled around April 2024.
The Bitcoin halving is an event that occurs approximately every four years and involves a 50% reduction in mining rewards.
Historically, the Bitcoin halving has been associated with an increase in the BTC price, leading to the miners' expectation of higher profitability.
*Not investment advice.
