The latest glassnode data shows that Bitcoin miners have sent an all-time high of $128 million to crypto exchanges. To put this into perspective, this is equivalent to 315% of their daily revenue.
This suggests an incoming selling pressure, one that is likely absorbed, as miners recoup their losses during the ‘crypto winter.’ Core Scientific was taken out as one of the largest US Bitcoin mining firms in that cycle. When it went public under the ticker CORZ, the company was valued at $4 billion in July 2021.
Just after the FTX collapse and across-the-board crypto market suppression, CORZ filed for bankruptcy in December. But with Bitcoin sentiment turning to greed after BlackRock’s ETF filing, investors could look into Bitcoin mining companies as indirect exposure.
In addition to the shifting institutional landscape, which triggered a $199 million flow into digital asset funds, there is also the matter of the upcoming Bitcoin halving in April 2024. Reducing BTC rewards from 6.25 BTC to 3.125 BTC effectively reduces Bitcoin’s inflation rate, making each BTC more valuable.
How are the three big Bitcoin mining companies – Riot Platforms (RIOT), Marathon Digital Holdings (MARA), and Hut 8 (HUT) – responding to these hints of a new bull cycle?
Riot Platforms (RIOT) Up 228% YTD
In January 2023, Colorado-based Riot Blockchain rebranded into Riot Platforms. Since April, the company has been exceedingly bullish, announcing the purchase of 42,000 S19j Antiminer rigs from the Chinese manufacturer Bitmain. The contract’s value stood at $138.5 million.
The extra miner fleet will push Riot’s hashrate power by 93% by adding 3.7 EH/s to a total of 7.7 EH/s. In addition to that acquisition, Riot Platforms made another big move this week. This time, 33,280 mining rigs – M56S+ and M56S – from another Chinese giant, MicroBT.
However, MicroBT will manufacture them in the US for a total price of $162.9 million. They should start coming online by the end of the year. Riot Platforms expects to increase its hashrate capacity to 20.1 exahash per second (EH/s) in 2024.
This would constitute the doubling of Riot’s mining capacity, having already climbed to 10.5 (EH/s) across 94,176 miners deployed by the end of May. Year-to-date, RIOT stock is up by 228%.
Marathon Digital Holdings (MARA) Up 281% YTD
The Las Vegas-based Marathon Digital had an innovative approach to increasing the hashrate capacity. In December, Marathon’s engineers optimized the output of S19j Pro and S19 XP rigs by 20% while reducing their energy consumption by ~4%.
The company also announced more tech innovations in dual-phase immersion, a type of cooling that transforms the rigs’ heat into boiled-off gas, which is then condensed into a cooling liquid. By Marathon’s account, this would reduce operational costs by 10% compared to traditional air-cooled mining rigs.
Due to regular tech improvements, Marathon concluded May with 77% more BTC mined, 366% more than May 2022. During the month, the company increased its operational hashrate to 15.2 EH/s, while the installed hashrate increased to 20.1 EH/s.
With further optimizations and Ellendale’s Applied Digital facility going online, Marathon expects to reach 23 EH/s target this year. As of May, the company reported 12,259 BTC holdings ($333.7 million), with unrestricted cash/equivalents of $97.3 million. Year-to-date, MARA stock is up by an impressive 281%, clearly perceived by the market as the best-in-class miner.
Hut 8 Mining (HUT) Up 260% YTD
In February, Canadian Hut 8 Mining made a big move when it announced the merger with its American rival U.S. Bitcoin Corp (USBTC). The latest filing to the Securities and Commission Exchange (SEC) shows the combined hashrate power of the two miners will be 7.5 EH/s.
The merger deal, which will birth Hut 8 Corp., would make the company the eighth largest by self-mining capacity, with a market cap of $990 million. Additionally, Hut 8 borrowed $50 million from Coinbase Credit on Wednesday.
Coinbase (COIN) increased nearly 14% over the week, despite the exchange’s clash with the SEC. Hut 8 CEO Jaime Leverton described the loan as “additional financial flexibility” that will “maintain our dynamic Bitcoin treasury management strategy going into the halving.”
As with many Bitcoin mining firms, 2022 ended poorly for Hut 8, having generated CAD$150.7 million in revenue and $248.8 million in net losses. However, pricing in the merger deal, year-to-date, HUT stock is up 260%.
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About the author
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
