Key Points
- Bitcoin mining difficulty dropped by 6% last week, the largest fall since December 2022.
- Lower Bitcoin prices and increased mining equipment costs have led to the closure of high-cost mining rigs.
Bitcoin miners experienced some relief last week when the complexity of mining fell by approximately 6%. This was the largest drop since December 2022. The complexity of mining refers to the computational work required to validate transactions and generate new coins. This decline in Bitcoin mining difficulty was seen as a positive development for Bitcoin miners.
The Impact of Mining Difficulty Drop
The decrease in difficulty is attributed to a combination of lower Bitcoin prices and a significant increase in mining equipment costs since the last Bitcoin halving in May 2020. These factors caused high-cost mining rigs to shut down, leading to a decrease in the overall hashrate, which is the combined computing power securing the Bitcoin network.
Riot Platforms (RIOT) and CleanSpark (CLSK) are identified as the leading Bitcoin miners with the lowest production costs. They have strong balance sheets and cash positions, giving them a strategic advantage. This allows them to weather market fluctuations more effectively.
Opportunities for Miners
The report highlights that a temporary pause in Bitcoin price is beneficial for lower-cost Bitcoin miners. This is because hashrates remain capped, and strong miners can execute their aggressive capex and M&A plans to grow market share. This window of opportunity allows them to expand their operations and solidify their dominance while others struggle.
The report also emphasizes the potential for these miners to capitalize on a future price upswing. When Bitcoin price momentum picks up, miners can harvest high dollar revenues over higher production.
The report does not predict a major price drop for Bitcoin. Instead, it anticipates a period of consolidation before a potential breakout. According to the report, the key to unlocking the next bull run lies in increased institutional investment. Spot exchange-traded funds (ETFs) attracting allocations from registered investment advisors (RIAs), wealth platforms, and other institutional funds are specifically mentioned.
CleanSpark and Riot Platforms have an “outperform” rating, suggesting that their performance will exceed the overall market. For Marathon Digital (MARA), the report assigns a “market-perform” rating, suggesting it will likely follow the broader market movement.
According to TradingView, Bitcoin is trading at the price of $62,980, marking a slight 0.42% gain in the last 24 hours, but still 6.26% down in the last month’s timeframe. Bitcoin has broken the crucial support level of $61,000 and could reach 65k if it maintains its upward trajectory.
