Bitcoin Miners Reap Rewards From Cryptocurrency Rally

Bitcoin miners are seeing a positive turnaround in their fortunes as the rally in cryptocurrencies continues in the first quarter of this year. According to an analyst note from investment firm Stifel, the first three months of 2023 are shaping up to be a better quarter for miners than the previous one. This is largely due to a 36% increase in hashprice, which measures how much miners earn based on several factors, to $0.08 per terahash.

Significant Earnings Boost

The rise in bitcoin prices is a significant boost to miners’ earnings, with CleanSpark Executive Chairman Matthew Schultz noting that it translates to about $200,000 in free cash flow daily for miners mining 20 bitcoin per day. Additionally, miners are also benefiting from a slump in power prices, which had previously squeezed their margins last year and caused some to file for bankruptcy.

The positive market conditions are helping struggling mining companies recover, with power prices coming down dramatically. As a result, miners are spending less on professional fees, and operationally, things are going great. However, analysts have warned that the better environment for mining may be partially offset by an increase in mining difficulty as competition heats up.


Schultz’s Prediction

Despite the influx of machines coming online, CleanSpark’s Schultz says he hasn’t seen a direct impact yet, but he expects it to have an impact on difficulty and mining economics. Difficulty is expected to jump between 5% and 6% this week, the third increase in a row, following a 9.95 % and 1.16% jump.

As newer generation machine deliveries are installed and brought online, there will likely be continued growth in the overall network hash rate in the near term, according to Stifel’s note. However, the market for ASIC machines is scarce at the moment, and there could be a lag before difficulty goes up to an extent if the price of BTC goes up a lot in 2023.


Equity for Growth

Miners have been in survival mode for several months, striving to deleverage themselves and clean up their balance sheets. While the debt markets are starting to show signs of life, miners’ access to capital remains restricted to equity or the sale of Bitcoin. Companies like CleanSpark, Hive Blockchain, Iris Energy, and Terawulf have either sold shares or raised equity to help them achieve their growth targets.

The rally in cryptocurrencies this year has been a significant boost for bitcoin miners, with a rise in hashprice and a slump in power prices resulting in increased earnings. While competition may heat up, and mining difficulty may increase, miners are optimistic about the future, with newer generation machine deliveries expected to lead to continued growth in the overall network hash rate.