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July Performance of Bitcoin Mining Stocks
In July 2023, Bitcoin mining stocks maintained their upward trajectory, with the top ten by market cap experiencing a median hike of 23.10%, giving a year-to-date yield of 277.34%. However, even as mining stocks prospered, the Bitcoin price dropped by 3.59% in the same month, marking a sixth-week trend of struggling to remain above the $30,000 mark since June. Nevertheless, despite this difficulty, Bitcoin's price for the year 2023 till now is 78.88% higher.
Impact of Bitcoin Price and Mining Difficulty on Miner Profitability
Lower prices of Bitcoin whittled down miners’ profits. The condition was aggravated further by escalating mining complication, which went up to an unprecedented level, squeezing miner profitability.
Even as the mining difficulty increases, historical data suggests a parallel increase in the network’s hash rate as miners augment their hashing power with the help of state-of-the-art machines up until the halving due in April 2024.
Strategies Adopted by Miners
Other than boosting their processing power, miners are adopting hedging methods such as selling Bitcoin futures to freeze current prices. As the year progresses and the network’s hash rate increases in expectation, miners’ profitability and stock valuations may face consequential pressure up until the halving.
Outlook on Bitcoin Mining Activity and Stock Performances
Even as Bitcoin’s price surged by approximately 80% since the beginning of the year, mining complexity has also risen by 51%, countering the increment in profitability from the price hike. In the meantime, the mining stocks of Bitcoin have held their ground, continuing their remarkable positive rally since the start of the year, with prospects of another month of positive closing in July, supported by a $500 million investment rumor from United States fund powerhouse, Vanguard, into Riot Platforms (RIOT) and Marathon Digital Holdings (MARA). However, indications of weakness were observed as most mining stocks posted two weekly negative closing past mid-July.
