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The Bitcoin (
$65,255.00 ) (BTC) price rebound to a multi-month high has rubbed onto the mining stocks as well. Many of these crypto-mining stocks recorded their best monthly performance in a year. The surge in mining stocks also came as a relief for the troubled miners who had to sell a significant chunk of their mined coins to boost liquidity last year.
Bitfarms, one of the top BTC mining firms registered a 140% surge in the first two weeks of January followed by Marathon Digital Holdings Inc. with a 120% surge. Hive Blockchain Technologies Ltd. saw its stock value nearly double in the same period while MVIS Global Digital Assets Mining Index is up by 64% in the first month as well.
The Luxor Hashprice Index, which aims to quantify how much a miner might make from the processing power used by the Bitcoin ( $65,255.00 ) network, has increased by 21% this year. This partly reflects larger rewards due to an increase in the price of Bitcoin ( $65,255.00 ) .
The bull run in 2021 prompted several mining companies to go public while others invested heavily in pieces of equipment and expansion. However, a prolonged crypto winter in 2022 exposed the vulnerabilities and lack of proper structuring in many of these mining firms.
Related: Samsung investment arm to launch Bitcoin ( $65,255.00 ) Futures ETF amid rising crypto interest
The 2021 bull market saw a significant increase in borrowing by the Bitcoin ( $65,255.00 ) mining industry, which had a negative effect on their financial standing during the succeeding bear market. Public Bitcoin ( $65,255.00 ) miners owe more than $4 billion in liabilities while the top 10 Bitcoin ( $65,255.00 ) mining debtors collectively owe nearly $2.6 billion. By the end of 2022, leading BTC miners such as Core Scientific filed for bankruptcy.
Public Bitcoin ( $65,255.00 ) mining companies with highest debt. Source: Hashrate Index
The BTC price surge in January has not just helped struggling crypto mining stocks to reach new yearly highs, but it also helped Bitcoin ( $65,255.00 ) -based exchange-traded funds (ETFs) to outperform most of the traditional equity ETF market as well.
