Crypto Miners Marathon Digital, Hut 8 Rally as Bitcoin Tops $50K

The Bitcoin blockchain’s hashrate has increased, and so has mining difficulty, but investors are betting the largest cryptocurrency’s recent price gains might translate to profit growth.

Oct 5, 2021 at 5:27 p.m. UTC
Updated Oct 13, 2021 at 8:49 p.m. UTC

Aoyon Ashraf is crypto mining reporter with more than a decade of experience in covering equity markets

The shares of cryptocurrency miners Marathon Digital Holdings, Inc. and Hut 8 Mining Corp. surged Tuesday as bitcoin’s price reached $50,000 for first time since early September.

The stocks, which often move in tandem with the largest cryptocurrency’s price, have steadily advanced since hitting lows in September, when prices for bitcoin slumped to near $40,000.

Marathon Digital rose 6.2% and Hut 8 Mining advanced 4.5%, leading gains in the sector. Bitfarms Ltd. climbed 4.2%, Hive Blockchain Technologies Ltd. was up 2.5% and Riot Blockchain, Inc. increased 2% in U.S. trading. The Canadian-listed miner Galaxy Digital Holdings Ltd. gained 2.3%.

A key gauge of bitcoin mining activity, the hashrate, has recovered from a steep plunge in early July, when China began a sweeping crackdown on the crypto industry. The hashrate measures the total computational power being applied on the Bitcoin blockchain to secure new data blocks on the distributed ledger.

The hashrate recovery has added to the positive investor sentiment for the miners.

“The bitcoin mining industry experienced the most dramatic short-term disruption in all history, with over 50% of the network hash power coming offline throughout May,” according to an Oct. 4 report by analytics firm Glassnode. The report added that the Bitcoin hashrate has been on a “consistent path to recovery” since.

Meanwhile, the mining difficulty, a variable gauge that automatically adjusts under the Bitcoin blockchain’s code to keep the network running smoothly, has also been ramping up since the July slump.

“After bottoming out in late July, protocol mining difficulty has risen by 39%, with a further additional upwards adjustment of around 3.9% expected this week,” the Glassnode report said. Generally speaking, a higher mining difficulty tends to tamp down profits in the sector because new bitcoins become harder to find for the mining computers known as “rigs.”

Future profitability

MicroStrategy Inc., often seen as a proxy for bitcoin, climbed 4.3%, while crypto exchange Coinbase Global, Inc. gained 3% and Robinhood Markets, Inc., where many users trade crypto, rose 2.8%. The wider S&P 500 index and the Nasdaq composite were also in the green on Tuesday.

The gradual recovery in cryptocurrency prices over the past few months, combined with rising hashrate and network activity, suggests that mining firms could stay profitable even as the market remains volatile.

“Despite dramatic shifts in the mining market, multiple deep price corrections and a halving event in May 2020, the Bitcoin block reward value continues to rise, creating incentives for the market to adapt, innovate and recover,” Glassnode report said.

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Aoyon Ashraf is crypto mining reporter with more than a decade of experience in covering equity markets

CoinDesk - Unknown

Aoyon Ashraf is crypto mining reporter with more than a decade of experience in covering equity markets

Trending

1
CoinDesk - Unknown
Nansen Research Debunks Single 'Attacker' Myth in Terra's Collapse

The TerraUSD stablecoin collapsed for one reason: big holders didn't trust it.

The TerraUSD stablecoin collapsed for one reason: big holders didn't trust it.

CoinDesk - Unknown
2
CoinDesk - Unknown
Siam Commercial Bank Is Chasing DeFi Yield Through Compound

The bank’s venture arm, SCB 10X, is using Compound Treasury’s 4% yield service via the Fireblocks custody platform.

The bank’s venture arm, SCB 10X, is using Compound Treasury’s 4% yield service via the Fireblocks custody platform.

CoinDesk - Unknown
3
CoinDesk - Unknown
Crypto News Roundup for May 27, 2022

We’re talking about bitcoin, when Skreli met Crypto, Ether is closing in May at 35% down, as investors look to safer risk profile investments. CoinDesk’s Markets Daily is back with the latest news roundup.

We’re talking about bitcoin, when Skreli met Crypto, Ether is closing in May at 35% down, as investors look to safer risk profile investments. CoinDesk’s Markets Daily is back with the latest news roundup.

CoinDesk - Unknown
4
CoinDesk - Unknown
What Happens if You’re Sexually Assaulted in the Metaverse?

This new technological medium may not need a new set of laws, but existing rules may need to be updated.

This new technological medium may not need a new set of laws, but existing rules may need to be updated.

CoinDesk - Unknown