Bitcoin stocks have been under pressure for the month of March, with small movements here and there following the price of BTC. Although encouraging most stocks to hold on to their impressive January gains, Bitcoin price action will hurt these stocks in the short- to medium-term.
In addition, the expansion of public sector Bitcoin mining in the US continues, as US miners announced one of the largest ASIC imports in January 2023. The delivery of new machines and the increase in the value of BTC caused the increase in the network hashrate to new all-time highs. And the income of the miners decreases in the difficulty of the network.
Mining values in glasses
Despite Bitcoin’s recent 18% rally, the underperformance of most mining networks can be attributed to uncertainty about the sustainability of Bitcoin’s rising price and increasing competition in the mining industry. The Hashrate index, which stands for Bitcoin mining, rose 10% in March from 1,929 to 2,141 points.
The average monthly profit of the top ten mining stocks is 0.30%, with an average of 5.21%. Luxury listings and Cipher Mining led the sector’s monthly gains with an increase of 28.64% and 24.34%. CleanSpark, Inc. and Bitfarms Ltd. performed the worst, with negative moves of 6.52% and 5.79%.
Average Q1 2023 gains for the top ten Bitcoin mining stocks are 128%. This stock generated the majority of its first-quarter 2023 earnings in January. The following months, February and March, saw the activities undertaken by the most shared mining companies.
Marathon Digital’s stock chart perfectly illustrates the price action across the industry, with a high candle in January, followed by little movement in the coming months.
Today, mining companies are more focused on growing and maintaining their operations than on profit. Marathon Digital increased its mining capacity by 30% in February. Crew growth expansion will increase production capacity from 9.5 EH/s to 23 EH/s by mid-2023.
At the same time, the Canadian mining company Hut 8 Mining Corporations announced its merger with the American Bitcoin Corp to combine its resources and weather the decline of the sector.
Network hash rate skyrockets as new ASICs flood the market
The Bitcoin network hashrate increased to an all-time high of 348 exahash per second (EH/s) from 320 EH/s in the last week of March.
Miner income has skyrocketed by around 30% following the recent rise in BTC price, from $65 per petahash per second (PH/s) per day in Q4 2022 to around $85 per PH/s per day in the first quarter of 2023, yet the price of Bitcoin has sent more than 60% during the same period.
Bitcoin’s increase in price is only due to the rise in hash rate. The discrepancy in miners’ income can be attributed to the increasing difficulty of mining. This was mainly due to the introduction of new devices in the US, which increased the power and complexity of the network.
In January 2023, US miners had imported 1,555 tons of machines, which pushed the hash rate of the network to its current peak.
The increased hash rate of the network limited the income of the miners, which would negatively affect the income of the miners if BTC prices were to drop from now on.
There is a chance that the network hashrate will stabilize around the current levels. The MinerMag report adds:
“If there is not a significant rebound in the gross weight of the ships in the rest of March and in April, the growth rate of the bitcoin hashrate network could slow down gradually.”
Bitcoin price performance will continue to play an important role in the growth of the mining sector, but the price of BTC needs to maintain its current level or rise further for positive returns and a perpetual boom in the public stock.
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