After a long, chilly crypto winter, struggling Bitcoin miners are now enjoying the warmth of spring. The cryptocurrency’s surge to above $30,000 this year, which worked in concert with lowering electricity prices to enhance their profitability, has provided a lifeline to the power-hungry businesses that continually pump new bitcoins into circulation.
Data from Blockchain.com show that the average mining revenue over the past 30 days has increased to $27.34 million per day, the highest amount since last June.
For most of the second half of 2022, revenues were stuck between $15 million & $21 million, making it difficult for miners to pay off high debt loads.
According to Jaran Mellerud, a researcher at bitcoin mining services provider Luxor, at today’s bitcoin price, these firms’ cash flows have significantly improved and the majority of them shouldn’t have any trouble meeting their obligations.
According to Luxor statistics, the debt-to-equity ratio of Marathon Digital Holdings has decreased from 2 to 0.5 since the beginning of this year, while that of Greenidge Generation Holdings has decreased from 11.7 to 5.8.
Investors have started to return to publicly listed cryptocurrency mining businesses as the spring thaw has taken hold. Among the major players, Marathon and Riot Platforms have observed their share prices more than quadruple this year.
But since early 2022, they have all continued to lose money. When a block is successfully completed, miners are paid with Bitcoin. They compete against one another by using computational devices that consume a lot of energy to solve complex mathematical problems.
According to BTIG analysts, the pressure on corporate margins has decreased as a result of falling power costs, notably in the US. The cost of electricity to produce one bitcoin has decreased by around 40% since the end of the year before.
Accordingly, the thirty average charge-per-transaction for miners has dropped to its lowest value since September, according to Blockchain.com data, despite both the network’s computing capacity and the mining difficulty steadily rising to new all-time highs, which implies that it should require more power to mine one block.
Out of the Woods?
Many miners are still suffering and have a lot of debt to pay out despite advances in their financial sheets, according to Mellerud of Luxor. According to BTIG, the majority of businesses are prioritizing debt reduction over investing in new machinery, despite the fact that the expected cost of fresh mining rigs has decreased by almost 69% since the close of 2021.
There are some exceptions, though. For instance, CleanSpark bought 45,000 new mining rigs to nearly quadruple its processing capacity by taking advantage of lowering pricing.