Publically traded Bitcoin mining companies in the US have recently experienced a significant surge in their stock prices, leading to a record combined market cap of $22.8 billion on June 15th. This growth has been attributed to multiple factors, including an increase in network hashrate share and a strategic move towards diversification into artificial intelligence (AI) data center ventures.
Stock Surge:
During the first half of June, 14 US-listed mining companies saw a notable surge in their stock prices, with Core Scientific (CORZ), TeraWulf (WULF), and Iris Energy (IREN) leading the pack. These three firms experienced increases of 117%, 80%, and 70%, respectively, since the beginning of June. However, Argo Blockchain (ARBK) was the only listed Bitcoin miner that witnessed a decline in its share price, down by 7% over the same period.
One of the significant catalysts for the growth in the collective miner market cap was a proposed acquisition and strategic partnership between Core Scientific and AI cloud provider CoreWeave. Despite CoreWeave’s offer of $1.6 billion for the acquisition of Core Scientific, which represented a 55% premium over its market price, the bid was ultimately declined. This offer came on the heels of a $3.5 billion, 12-year partnership agreement that allowed CoreWeave to utilize Core Scientific’s data centers for its AI services.
It is worth noting that other Bitcoin miners are also considering similar diversification strategies to enable them to contribute compute power to AI networks and development, showcasing a growing trend within the industry.
Market Share:
According to analysts at JP Morgan, the rise in market cap can also be attributed to the increasing share of network hashrate among US Bitcoin miners. Since the April halving event, US miners have gained a larger market share of Bitcoin’s hash rate, with a rising percentage of 23.8% in June, up from 22.9% in May, and 21% in April. This increase has been facilitated by less efficient operations exiting the market.
The analysts at JP Morgan further compared companies’ trading value to their proportional share of the block reward opportunity, noting that firms are currently trading at 2.25 times their proportional share—a decrease from the high of 2.4 times in February but an improvement from the post-January 2022 average of 1.5 times. The report projected that US miners would produce approximately 650,000 Bitcoin over this four-year halving cycle.
Additionally, the analysts pointed out that the hash price for Bitcoin is currently 15% below the bear market lows of December 2022 and 45% below pre-halving levels, indicating that these levels are not sustainable in the long run. They expressed an expectation for the hash price to increase in the upcoming weeks as the network’s hashrate declines.
Conclusion:
The recent record market cap achievement by US-listed Bitcoin miners highlights the growing prominence and profitability of the sector. The surge in stock prices, driven by factors such as increased network hashrate share and diversification into AI data center ventures, demonstrates the resilience and adaptability of these companies in a rapidly evolving market.
As the industry continues to evolve and innovate, with a focus on diversification and technological advancements, US-listed Bitcoin mining companies are poised to play a significant role in shaping the future of digital currencies and blockchain technology. The strategic partnerships and acquisitions being explored indicate a forward-looking approach that positions these companies for sustained growth and success in the long term.
