Bitcoin Miners Fall as Cryptocurrency Price Retreats After SEC Approval
Bitcoin miners experienced a decline in value on Thursday as the price of the cryptocurrency dropped following the approval of the first U.S. spot bitcoin exchange-traded funds by the U.S. Securities and Exchange Commission (SEC). The two largest mining stocks, Marathon Digital and Riot Platforms, saw losses of 12% and 15% respectively. Iris Energy fell 6% and CleanSpark lost 7%. This decline came after bitcoin briefly reached a price above $49,000 for the first time since December 2021 but subsequently pulled back to around $46,000.
Miners’ Performance in 2022 and Recent Revenue Decline
In 2022, miners were some of the top-performing stocks in the market. Marathon saw a gain of almost 590%, while Riot rose over 350%. CleanSpark and Iris Energy both experienced gains of more than 400%. However, miner revenue has recently fallen due to eased bitcoin transaction fees. High fees were observed in December due to increased transaction activity on the network, but they have since cooled off, impacting mining companies’ revenue.
Anticipation for Bitcoin Halving Event
Investors may also be preparing for the upcoming Bitcoin halving event expected in April. During this event, the mining reward and mining companies’ revenue will be cut in half according to the Bitcoin code. While historically preceding significant gains in bitcoin that benefit mining stocks, the halving event could lead to unprofitable miners exiting the market, allowing more sustainable miners to gain market share.
Hot Take: Impact of SEC Approval and Bitcoin Volatility
The recent decline in bitcoin miners can be attributed to the SEC’s approval of spot bitcoin exchange-traded funds. This news led to a volatile trading environment for the cryptocurrency, causing its price to retreat. As a result, mining stocks experienced losses. Additionally, the anticipation of the Bitcoin halving event and the recent decline in miner revenue due to eased transaction fees have contributed to the downward trend. However, despite these challenges, the long-term potential for sustainable miners remains promising as they adapt to market changes and capitalize on future opportunities.
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