FameEX Hot Topics | Despite Bitcoin's Surge, Mining Stocks Struggle to Keep Up with 2024 Gains

Bitcoin has delivered a remarkable 113% return in 2024 as of December 24, yet most Bitcoin miners’ stocks have struggled to match the cryptocurrency’s gains, with many ending the year in the red. Despite the surge in Bitcoin’s price, mining companies have faced significant challenges, leading to mixed results in the stock market. According to data from the Hashrate Index and Google Finance, the majority of publicly listed miners are seeing losses, with some companies experiencing declines as high as 84%.

Among the 25 listed miners tracked by the Hashrate Index, only seven companies have managed to generate positive returns for investors this year. Bitdeer (BTDR) stands out with a 167% increase, while Core Scientific (CORZQ) has surged by 327%. Other companies such as Hut 8 (HUT), Iris Energy (IREN), and TeraWulf (WULF) have also posted solid gains of 91%, 72%, and 169%, respectively. However, many miners are struggling, with Argo Blockchain (ARB) down by 84%, Sphere 3D (ANY) slipping 69%, and Bitfarms (BITF) losing 44%. This stark contrast reflects the difficulties in the mining sector despite Bitcoin’s stellar performance.

2024 has proven to be a year of adaptation for Bitcoin miners, who have had to navigate a variety of challenges, including reduced rewards and rising operational costs. The most significant event for miners this year was the Bitcoin halving in April, which reduced the block reward from 6.25 BTC to 3.125 BTC, cutting miners' earnings. According to Blockchain.com, miners’ revenue on December 22 had fallen to $42 million, a sharp drop from the peak of over $100 million in April. Alongside this, the difficulty of mining new blocks doubled from last year, adding further strain to profitability.

Rising mining costs have also compounded the situation. Companies like BitFuFu reported a 168% increase in Bitcoin mining costs, reaching $51,887 per BTC. The difficulty of mining new blocks has added pressure, with the average Bitcoin difficulty increasing by 50.71% over the past year. In response to these challenges, many publicly traded mining companies have turned to capital markets for funding, raising a combined total of over $2.2 billion in the first three quarters of 2024 through stock offerings.

To offset the impact of the halving and increased costs, some miners have sought diversification. Core Scientific, for example, entered the AI sector by partnering with CoreWeave to host Nvidia GPUs, capitalizing on the growing demand for AI computing. This partnership is expected to generate significant revenue, with projections of up to $8.7 billion over the next 12 years. Additionally, companies like MARA and Hut 8 have bolstered their financial positions by accumulating Bitcoin reserves, following the lead of other publicly listed mining firms. These moves reflect a strategic shift as miners attempt to strengthen their balance sheets in a challenging environment.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.