The Bitcoin price bounce to a multi-month high has also benefited mining stocks.
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The boost in crypto mining stocks served as a comfort to the sector after a disastrous year during which public crypto miners suffered $4 billion in liabilities.
The Bitcoin price bounce to a multi-month high has also benefited mining stocks. Several crypto-mining stocks had their highest monthly results in a year. The mining stock surge also provided some relief to the suffering miners, who had to sell a substantial part of their coins to increase liquidity in 2022.
One of the major BTC mining firms, Bitfarms, saw a 140% increase in the first two weeks of January 2023, and Marathon Digital Holdings saw a 120% rise. The stock value of Hive Blockchain Technologies almost doubled at that time, while the MVIS Global Digital Assets Mining Index increased by 64% in the first month of the new year.
This year, there has been a 21% rise in the Luxor Hashprice Index, which measures how much a miner might gain from the processing power used by the Bitcoin network. This is partly due to higher payouts when the price of bitcoin rises.
Several mining companies went public in 2021 as a result of the bull market, and others made substantial investments in new equipment and expansion. However, a protracted crypto winter in 2022 revealed the flaws and improper structuring of a lot of these mining firms.
The Bitcoin mining sector borrowed significantly more during the 2021 bull market, which had a negative impact on their financial situation during the following bear market. The top 10 Bitcoin mining debtors collectively owe close to $2.6 billion, compared to the more than $4 billion in liabilities owed by public Bitcoin miners. Some well-known Bitcoin miners, such as Core Scientific, declared bankruptcy by the end of 2022.
The BTC price increase in January assisted struggling crypto mining firms attain new yearly highs, but it also helped bitcoin-based exchange-traded funds surpass the majority of the traditional equity ETF market.