In the dynamic world of cryptocurrency, Bitcoin mining saw a notable increase in profitability in February, outpacing January’s figures. This uptick came as Bitcoin’s price experienced a 15% rise, despite the network’s hashrate—a measure of the total computational power used in mining and processing—growing at a more modest rate of 9%. Investment bank Jefferies highlights these developments in a recent research report, shedding light on the shifting landscape of Bitcoin mining, especially among publicly traded North American companies.
Shifting Shares in Bitcoin Production
February witnessed a slight decrease in the proportion of Bitcoin produced by publicly listed North American miners, dipping to 17.5% of the network’s total from 19%. This shift indicates the entrance of new hashrate contributors outside of these major players, diversifying the sources of Bitcoin mining power. Despite the network hashrate nearly doubling compared to the previous year, these public entities have seen a reduction in their market share, Jefferies analysts Jonathan Petersen and Amanda Santillo point out.
Strategic Moves Among Mining Giants
Marathon Digital’s strategy has evolved from relying on third-party hosting services for their mining operations to taking a more direct control approach. By acquiring some of these hosting services, Marathon aims to bolster its position ahead of Bitcoin’s next halving event. Jefferies supports this strategic pivot, citing Marathon’s scale as a vital asset in expanding and sustaining its market presence.
However, the investment bank has adjusted its outlook on Marathon Digital, lowering its price target from $30 to $24, due to concerns over operational disruptions at Applied Digital sites affecting future performance expectations. On the other hand, Argo Blockchain’s price target received a boost to $1.50 from $1.20, reflecting the uptick in Bitcoin’s value and Argo’s focused capital expenditure strategy. This approach enables Argo to augment its mining capabilities and hasten hashrate growth, leveraging the increased cash flow for purchasing additional mining equipment.
Looking Ahead
As the cryptocurrency market continues to evolve, the profitability of Bitcoin mining remains a key indicator of the sector’s health and potential. Jefferies’ report underscores the importance of strategic flexibility and the impact of broader market trends on mining companies’ fortunes. With Bitcoin’s next halving on the horizon, the actions taken by these mining firms could well determine their competitive standing in the increasingly crowded and complex mining landscape.
