© Reuters The underperformance of Bitcoin mining stocks is a ‘compelling buying opportunity’ – analyst
On Tuesday, analysts at H.C. Wainwright released a note providing their views on the Bitcoin (BTC) mining industry, noting a significant increase in the collective operating hash rate among publicly traded BTC miners for February. The hash rate rose by 8% month-over-month to 125.7 EH/s, representing 22% of the total network hash rate at month-end, up from 21% in January, said the firm. Despite this increase, there was a 12% month-over-month decline in total BTC production, with miners producing 5,175 BTC compared to 5,848 BTC in January.
The decrease in BTC production was attributed to a 52% month-over-month drop in transaction fees and a 9% increase in network difficulty, along with February’s shorter duration compared to January. Additionally, miners sold 60% of the BTC they produced in February, which was less than the 65% sold in January.
The recent Bitcoin price rally took a slight pause on Tuesday, with the cryptocurrency currently down around 0.3% at $71,929.
In the investment sphere, H.C. Wainwright noted that BTC ETFs in the U.S. experienced record inflows. Last week, these funds attracted over $2.2 billion in net inflows, surpassing the previous week’s record of $1.7 billion. This surge in interest has propelled BTC prices to new heights, with the cryptocurrency trading above $72,000 for the first time, following a breakthrough past its prior all-time high of $69,000 on the previous Tuesday.
The firm also noted that BlackRock’s recent filings indicate plans to invest in Bitcoin ETFs, including its iShares Bitcoin Trust and other issuers’ ETFs. This move is part of a broader trend of institutional adoption, with BlackRock’s three funds—the Global Allocation Fund, Strategic Income Opportunities Fund, and Strategic Global Bond Fund—now able to allocate to spot BTC ETFs. H.C. Wainwright also highlighted that MicroStrategy has continued to invest in BTC, purchasing an additional 12,000 BTC for approximately $821.7 million.
Last week, BTC’s price increased by 9.4%, nearly reaching its previous all-time high set in November 2021. The network hash rate grew by 8.0% week-over-week, while network difficulty remained unchanged. Despite the positive price movement of BTC, mining stocks experienced a 1.4% week-over-week decline.
H.C. Wainwright echoed comments earlier today, stating that mining stocks’ recent underperformance represents a “compelling buying opportunity.” The firm attributes the underperformance to capital moving from mining stocks to spot BTC ETFs, concerns around miner revenues post-Bitcoin halving, and a correction after mining stocks outpaced BTC price gains in the fourth quarter of 2023. The firm maintains a positive outlook on the BTC mining sector, noting that miners significantly outperformed BTC in 2023.
