Ben Strack

Bitcoin mining stocks have struggled in recent weeks despite BTC’s relentless price rally.



Market concerns related to the upcoming bitcoin halving are the main reason, segment observers noted. The halving is expected to occur in late April, at a block height of 840,000.



Mining behemoth Marathon Digital — with a standout energized self-mining hash rate of 28.7  exahashes per second (EH/s) — was down 20% from a month ago, as of 12 pm ET Wednesday. 



Read more: <a href="https://blockworks.co/news/btc-price-action-all-time-high">BTC price dips after all-time high. Where is it headed next?</a>



The stock prices of rival companies Riot Platforms, Bitfarms and Bitdeer also hover around the 20% decline mark over that span. 



<a href="https://blockworks.co/tag/hut-8">Hut 8</a>, which <a href="https://blockworks.co/news/new-look-hut-8-eyes-ai-related-opportunities-after-merger">merged with US Bitcoin Corp in November</a> and <a href="https://blockworks.co/news/hut-8-mining-ceo-strategy">switched its CEO last month</a>, is down 11.5% from a month ago.&nbsp;



Core Scientific, which <a href="https://blockworks.co/news/core-scientific-relisting-shares-tumble">emerged out of bankruptcy in January</a>, has fared a bit better, dipping about 8% in the last 30 days. Cipher Mining’s stock is down just 2% from a month ago.&nbsp;&nbsp;



Las Vegas-based miner <a href="https://blockworks.co/tag/cleanspark">CleanSpark</a> has bucked the downward trend, with its share price seeing a 10% gain over the past month.



The recent underperformance of most <a href="https://blockworks.co/tag/mining">mining</a> stocks comes just weeks before the next bitcoin <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>, during which per-block rewards for miners is set to drop from 6.25 BTC to 3.125 BTC. Such an event occurs roughly every four years.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-markets-explainer">The next bitcoin halving is coming. Here’s what you need to know</a>



Compass Point Research &amp; Trading analyst Joe Flynn said in a Feb. 27 research note that he expected miner stock volatility to continue in the 50-day leadup to the halving, followed by “eventual short-term weakness related to hash price declines.”



Hash price — taking into account bitcoin price, network difficulty, block subsidy and transaction fees — <a href="https://data.hashrateindex.com/chart/bitcoin-hashprice-index">measures</a> how much a miner can expect to earn from a specific quantity of hash rate. It is positively correlated to BTC price changes and negatively linked to fluctuations in bitcoin mining difficulty. Bitcoin’s price has risen more than 20% since Flynn’s Feb. 27 note was published.



“We think the market is trying to determine the equilibrium levels of BTC price and hash rates and the near-term impact on profitability as a result of the halving,” Flynn told Blockworks Tuesday.



<a href="https://blockworks.co/news/bitcoin-btc-all-time-high-70k">Bitcoin’s price stood at about $72,800</a> on Wednesday at 12 pm ET — up about 14% from a week ago, but down from its high of more than $73,600 reached earlier in the day.



It remains to be seen if there will be a pre-halving correction in BTC prices similar to prior cycles, Flynn noted.



“But after hash prices decline post halving, we expect strength in miner stocks…with BTC price growth outpacing the rate at which new machines can be installed or come back online,” he added.&nbsp;



<h2 class="wp-block-heading">Other factors currently ‘bothering markets’</h2>



The concerns for miners ahead of the halving are “warranted,” said Dan Weiskopf, a co-portfolio manager of the Amplify Transformational Data Sharing ETF (BLOK). Not every miner will survive the halving, he added.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-crypto-miner-consolidation">Bitcoin miner consolidation appears imminent as halving looms</a>



The hash rate from a portion of certain application-specific integrated circuit (ASIC) models <a href="https://blockworks.co/news/bitcoin-halving-crypto-miner-consolidation">are likely to go offline</a> when the halving changes the breakeven revenues for such machines.&nbsp;



Home retail miners, smaller private operations and miners in areas with higher power costs are particularly at risk of ceasing operations, segment observers have said.



“The higher BTC price has led to concerns around miners who have not upgraded their equipment staying on line longer rather than shutting, since they can afford to run less efficient equipment when BTC price is at current levels,” Weiskopf told Blockworks.



Another factor currently “bothering markets” is the proposed 30% excise tax on miners’ energy usage, the BLOK co-portfolio manager argued.&nbsp;



The Biden administration <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">first floated such a tax on miners</a> last year, citing environmental concerns. That possible tax appeared again in the US Department of Treasury’s 2025 revenue proposals.



Read more: <a href="https://blockworks.co/news/us-treasury-2025-greenbook-crypto-taxes">US Treasury once again proposes new crypto tax rules to “modernize” code</a>&nbsp;



Weiskopf said allocating to miners will continue to be a key strategy for BLOK — a fund that has CleanSpark, Marathon and Riot among its top 12 <a href="https://amplifyetfs.com/blok-holdings/">holdings</a>.



Read more: <a href="https://blockworks.co/news/blok-bitcoin-halving-spot-etf">BLOK ready for possible BTC rally ahead of halving, spot ETF</a>



He added that he expects bitcoin’s price to trend higher, with dips being absorbed by institutions <a href="https://blockworks.co/news/bitcoin-etf-inflows-price-rally">buying spot bitcoin ETFs</a>.



“A higher price from here will make the miners reach cash flow goals faster than planned and enhance [return on investment], and we would expect many of the miners we own to build out their facilities more aggressively,” Weiskopf said. “Access to capital continues to be a competitive edge for most miners.”



Marathon Digital recently <a href="https://blockworks.co/news/marathon-digital-terminates-competitor-involvement">bought two mining sites in Nebraska and Texas</a>, while CleanSpark has also <a href="https://blockworks.co/news/cleanspark-site-acquisition-bitcoin-halving">sought out growth via facility acquisitions</a>. <a href="https://blockworks.co/tag/marathon-digital">Marathon</a> executives said the company was ready to <a href="https://blockworks.co/news/marathon-digital-2023-q4-earnings">use the roughly $1 billion of “dry powder” on its balance sheet</a> in a bid to double its hash rate by the end of 2025.



Riot Platforms, which too has <a href="https://blockworks.co/news/riot-plots-hash-rate-growth">aggressive hash rate growth plans</a>, had about $900 million in combined cash and bitcoin on its balance sheet at the end of 2023.



Flynn said: “We like miner stocks with the ability to grow [their] own hash rate, lower unit costs as a result of efficiency gains, and with clean balance sheets and already low power prices going into halving.”



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Why most bitcoin mining stocks are down amid a persistent crypto rally

Casey Wagner

<div id="highlights-block_61f2daa76094d" class="highlights">
 <ul>
 <li>As investors embrace a risk-off approach, bitcoin is trading more in sync with equities </li>
 <li>The correlation will fade and bitcoin will rise, though, analysts say </li>
 </ul>
 
</div>



Amid growing concerns about inflation and looming rate hikes from the Federal Reserve, bitcoin has been moving more in sync with stocks than ever before.&nbsp;



An imminent end to the Fed’s ultra-easy monetary policy days has investors reconsidering their appetite for risk.&nbsp;



“The same players who pursued significant risk-on sentiment are now moving towards a risk-off approach as the Fed gears up to change course on interest rates,” said Josh Olszewicz, head of research at Valkyrie Funds.&nbsp;



Though bitcoin is trading more in tandem with the tech-heavy Nasdaq, traders expect the association to weaken over time. 



“Markets tend to increasingly correlate on the down side, and eventually this trend may decouple, just as it has in years prior,” said Olszawicz.&nbsp;



The correlation coefficient between bitcoin and the Nasdaq broke 0.60 earlier this month, the highest level in more than a year, according to a <a href="https://blog.kaiko.com/bitcoins-correlation-with-equities-surges-d55456a3e37" target="_blank" rel="noreferrer noopener">report</a> from crypto data firm Kaiko. The digital currency is also trading more closely to the S&amp;P 500. A coefficient of 1 means the assets are moving in tandem, while a -1 signals the opposite.&nbsp;



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="546" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png" alt="Bitcoin, once touted for its uncorrelated nature, is starting to trade more like stocks" class="wp-image-16149" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=1376 1376w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></figure></div>



Bitcoin has dropped more than 20% on the year. The Nasdaq has lost close to 14% over the same period. Cathie Wood’s ARK Innovation ETF (ticker ARKK), which has top holdings in Spotify, Tesla and Zoom, is down more than 30% year-to-date/



“Bitcoin should remain as a sound money alternative while some players in the tech sector are likely to be better priced according to their fundamentals,” Olszawicz said.&nbsp;



Once the current sell-off rebounds, bitcoin should start to trade in a less-correlated way, analysts project.&nbsp;



“The ‘don&#8217;t fight the Fed’ mantra pertains to all risk assets, notably equities,” said Mike McGlone, senior commodity strategist at Bloomberg Intelligence. “Cryptos are among the riskiest most speculative assets, but bitcoin is the least risky crypto.”&nbsp;



Bitcoin’s increasing adoption will help, too, McGlone added.&nbsp;



“I expect bitcoin to come out ahead in this market risk-off period as the benchmark crypto transitions to global digital collateral, which is a minor fraction of most portfolios,” McGlone said. “That&#8217;s changing, and 2022 may mark a key transition period.”


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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

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