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Bitcoin Mining Profits Surge in February
Bitcoin mining proved more lucrative in February than in January, with the cryptocurrency’s price rising by 15%. Despite the network’s hashrate nearly doubling from a year ago, publicly traded miners saw a decline in market share, according to a report by investment bank Jefferies.
Bitcoin’s Mining Profitability Increased
The research report, released on Monday, highlighted that Bitcoin’s mining profitability increased in February, with the cryptocurrency’s price experiencing a notable uptrend compared to January. The network’s hashrate also saw growth, albeit at a slower pace of 9%.
Notably, publicly listed North American mining companies produced a smaller share of Bitcoin compared to the previous month, accounting for 17.5% of the total network, down from 19%. This shift was attributed to new hashrate coming online from other sources. Analysts Jonathan Petersen and Amanda Santillo noted in the report that, despite the network’s hashrate almost doubling from a year ago, publicly traded miners have experienced a decline in market share.
The Company Relied on Third-Party Providers
Marathon Digital (MARA), one of the publicly traded mining companies, has recently changed its strategy. Previously, the company relied on third-party providers to host its machines, but it has now started buying out some of these hosting services. This strategic shift was described as a “defensive move ahead of the halving” by Jefferies analysts, who support this change.
The report highlighted the competitive advantage of Marathon Digital due to its scale, which allows it to purchase more ASICs (application-specific integrated circuits) to expand and maintain market share.
Jefferies maintained its hold rating on Marathon Digital shares but lowered its price target to $24 from $30. The adjustment reflects the downtime at the Applied Digital sites, which has impacted the bank’s confidence in future uptime assumptions.
In contrast, the bank increased its price target on hold-rated Argo Blockchain (ARBK) to $1.50 from $1.20, reflecting the higher bitcoin price. Jefferies noted that with less capital expenditure dedicated to mining facility development, Argo Blockchain should have the cash to buy additional miners and increase hashrate more rapidly.
In summary, Bitcoin mining proved to be more profitable in February compared to January, driven by a significant increase in the cryptocurrency’s price. Despite the network’s hashrate growth, publicly traded miners have seen a decline in market share, leading to strategic shifts in some companies like Marathon Digital.
