Bitcoin
Stable Bitcoin Prices Benefit Cryptocurrency Miners, Says Bernstein By Investing.com
Analysts at research and broker Bernstein highlighted the unexpected benefits that stable prices have brought to cryptocurrency miners. Despite the lack of major price changes, currently oscillating between highs of $50,000 and lows of $60,000, the situation has proven favorable for mining operations, especially after the fourth Bitcoin halving on April 20.
The halving, which halved the reward for Bitcoin mining transactions, was expected to burden the mining industry. However, subsequent “stabilized” price action eased competitive pressures, allowing miners to maintain profitability even as operating costs doubled.
This phenomenon has resulted in adjustments to mining dynamics, including a 10% drop in Bitcoin’s hash rate from a seven-day moving average of 638 EH/s to 579 EH/s, leading to the latest difficulty adjustments.
Hash rate refers to how much revenue a crypto miner can expect to make daily with 1 PH/s or 1 TH/s of hashing power.
This decrease in hash rate also led to longer average block times of approximately 10 minutes and 36 seconds, slightly above the Bitcoin protocol target of 10 minutes. Mining difficulty, a measure that ensures new blocks are produced on average every ten minutes, fell 6% to 83.1 trillion hashes, marking one of the strangest drops since the December 2022 crypto winter.
“Bitcoin’s stagnant prices are actually beneficial for existing low-cost miners,” said analysts at Bernstein.
“This allows them to consolidate market share and execute aggressive capital expenditures and M&A plans without the wake-up effect of relentlessly increasing spending just to maintain market position.”
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Among the top miners, CleanSpark (NASDAQ:) and Riot Platforms (NASDAQ:) are known for operating with best-in-class production costs, with strong Bitcoin balances and cash positions. They have also expanded their operations, with Riot planning to triple their actual capacity to 31.5 EH/s at a new facility in Corsicana.
CleanSpark is also acquiring new facilities in Mississippi and Wyoming, bringing its total capacity to 75 MW.
Bernstein expects these leading miners to continue to consolidate their market share through organic growth and acquisitions. As such, the report expects that CleanSpark and Riot will end up controlling around 6% of the network by 2025, up from around 4.7% currently.