Bitcoin price rally provides much needed relief for BTC miners
Bitcoin mining powers network transactions and BTC price. During the 2021 bull run, some mining operations raised funds against their Bitcoin ASICs and BTC reserves.
Miners also preordered ASICs at a hefty premium and some raised funds by conducting IPOs.
As the crypto market turned bearish and liquidity seized within the sector, miners found themselves in a bad situation and those who were unable to meet their debt obligations were forced to sell the BTC reserves near the market bottom or declare bankruptcy
Notable Bitcoin mining bankruptcies in 2022 came from Core Scientific, filing for bankruptcy, but BTC’s early 2023 performance is beginning to suggest that the largest portion of capitulation has passed.
Despite the strength of the current bear market, a few miners were able to increase production throughout 2022 and on-chain data shows Bitcoin miner accumulation began to increase in December 2022 and momentum appears to be continuing into 2023.
The 2023 Bitcoin rally which saw BTC price hit a yearly high of $22,153 on Jan. 20, a 17% 7-day increase, has significantly helped BTC mining operations.
An increase in Bitcoin price and the network’s hashprice are helping BTC miners that kept net positive balances at the end of 2022 which is improving business stability. In addition, now Bitcoin miners are mostly back in profit.
While more miners are turning back on Bitcoin mining rigs, the difficulty is increasing which may hinder future upside. With conditions improving will Bitcoin miners continue to accumulate or continue the trend of selling?
Recapping 2022, Jaran Mellerud a Bitcoin mining analyst for Luxor Mining said:
BTC hashprice, a metric that measures the market value of mining or computing power, provides insight
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