Despite Bitcoin’s surge, mining stocks struggle to match gains in 2024

Bitcoin (BTC) is posting a 113% return in 2024 as of Dec. 24, yet most miners’ stocks have struggled to capitalize on the cryptocurrency’s gains, closing the year in the red.

According to data from the Hashrate Index and Google Finance, the majority of publicly listed miners are ending 2024 on the negative side of the charts, with declines as high as 84%.

Among the 25 listed miners in the index, only seven companies are delivering gains for investors year-to-date. At the time of this writing, Bitdeer (BTDR) is soaring 167%, Cipher (CIFR) is gaining 33%, Hut 8 (HUT) is jumping 91%, Iris Energy (IREN) is rising 72%, Northern Data (NB2) is up 58%, Core Scientific (CORZQ) is climbing 327%, and TeraWulf (WULF) is at 169%.

On the other hand, Argo Blockchain (ARB) is down 84%, followed by Sphere 3D (ANY) slipping 69%, MARA Holdings (MARA) falling 12%, Hive (HIVE) down 29%, Greenidge (GREE) declining 74%, Bitfarms (BITF) sliding 44% and BitFufu (FUFU) losing 18%, to name a few.

Miners’ hurdles in 2024

Overall, 2024 was a year of adaptation for Bitcoin mining companies as they navigated reduced rewards and increased costs and sought new revenue streams to sustain their operations.

Miners have earned a cumulative of over $71 billion since the network’s inception, but about every four years, their revenue for mining new blocks is slashed in half during the halving event. The latest Bitcoin halving took place in April and reduced mining rewards from 6.25 BTC to 3.125 BTC. 

According to data from Blockchain.com, miners’ revenue on Dec. 22 stood at $42 million, compared with a peak above $100 million in April.

Related: Bitcoin halving 2024: 5 ways it’s different this time

Meanwhile, the difficulty of creating a new block on the Bitcoin blockchain doubled from last year, adding pressure to the rising operational costs related to Bitcoin mining. The current average Bitcoin difficulty is 108.52, up from 72.01 one year ago, reflecting a 50.71% increase over the past 12 months.

Mining expenses also surged due to increased operational costs. For instance, BitFuFu reported a 168% rise in Bitcoin mining costs, reaching $51,887 per BTC, alongside a 62.5% increase in mining capacity. 

To bolster their financial positions, many publicly traded mining companies turned to capital markets.

In the second quarter, nine out of 13 United States-listed Bitcoin mining firms collectively raised approximately $1.25 billion through stock offerings. This trend continued into the third quarter, with an additional $530 million secured, bringing the total to over $2.2 billion.

Related: Bitcoin miner Argo repays $35M Galaxy bailout loan

In addition, some companies sought to diversify their operations in 2024. Core Scientific, traditionally focused on Bitcoin mining, entered the AI sector by partnering with CoreWeave to host Nvidia GPUs, aiming to capitalize on the growing demand for AI computing power. The partnership is expected to generate up to $8.7 billion in revenue over the next 12 years for Core Scientific.

Some mining companies are now following the lead of publicly listed firms by bolstering their balance sheets with Bitcoin reserves. The latest to make this move are MARA and Hut 8.

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