The State of Bitcoin Mining Right Now
The State of Bitcoin Mining Right Now, Most risky assets, including bitcoin and public bitcoin mining equities, have experienced significant losses from all-time highs. Bitcoin has lost 41.20 percent of its value since its all-time high in November, while the whole bitcoin mining business has lost 64.10 percent of its value.
Over the last few years, public bitcoin miner stocks have served as additional investment vehicles for indirect bitcoin exposure with the potential to outperform bitcoin – at least until the market flipped in November 2022.
How well do miners perform in bitcoin terms, aside from being priced in USD? Those who use bitcoin as a unit of account will naturally seek for opportunities to outperform bitcoin in order to increase their overall bitcoin holdings and share of a limited supply. Bitcoin miners are starting to look rather inexpensive when priced in BTC terms, since many of these companies are nearing or making new 12-month lows as a result of the recent drawdowns.
BTC stock Market Value
Although we believe the larger stock market (and, most likely, bitcoin) will continue to decline this year, individual mining stocks may be closer to a bottom than the rest of the market, with most currently down 60% to 70%. Below are some of the major public miners’ BTC prices over the last year, which are significantly lower than their annual averages.
Over the last six months, there has been a performance reduction in comparison to bitcoin. Since 2020, select miners have outperformed bitcoin, with bitcoin’s hash price climbing from $0.07 to $0.42 at its most recent peak. Miners have been in a golden moment making more income per hash as the price has exploded and the hash rate has lagged behind, resulting in a period of higher profits, higher earnings, and higher market values.
Here are some of the miner equity returns in bitcoin since 2020, based on the top market capitalization miners. Marathon and Riot stocks outperformed bitcoin by 202 percent and 70 percent, respectively, as a result of the hash price increase combined with rising investor demand and speculation. It’s also vital to pick and time the proper miner stock (or basket of miner stocks) to outperform, which makes self-custody bitcoin the ideal option for most people.
Returns and Outperformance of Bitcoin Mining
Since 2021, those returns and outperformance have been subdued (or even negative), demonstrating how challenging it has been for miners to beat bitcoin during a broader macro swing to a risk-off market climate.
Hash price (miner revenue per terahash) is now about $0.182 and is continuing to decrease from its higher short-term trend as price stagnates and hash rate growth diverges, down 14.46 percent and up 22.23 percent year-to-date. By the end of the year, the overall hash rate would be close to 289 EH/s, based on a roughly yearly 66.69 percent growth rate.
Despite the fact that bringing so much hash rate and power online this year is a tremendous undertaking due to ASIC supply chain delays, power capacity concerns, and rising energy costs, a few of major public miners are planning to increase their hash rate by 154 percent from 37.1 EH/s to 94.1 EH/s by 2022. This growth (table below) accounts for all 2022 plans, both self-mined and hosted hash rate.
Expect the network’s hash rate expansion to continue in the absence of a bullish price trigger in the near term; increased difficulty adjustments will continue to push hash price lower. Over the course of bitcoin’s lifetime, hash price will naturally trend towards zero as the marginal cost of manufacturing a bitcoin gets more competitive, but there will be profitable periods where price appreciation outpaces hash rate’s potential to rise in the short term.
ASICs Miner prices and efficiency
Following a local peak in November 2021, ASIC prices in USD have been steadily declining all efficiency tiers. This could make ASICs more enticing to purchasers at cheaper rates, but it will also diminish asset values for large fleet owners. Hashrate Index, like hash price, expects prices to continue to fall towards post-China ban lows.