© Reuters Underperformance of Bitcoin mining stocks a 'compelling buying opportunity', analyst says
On Tuesday, analysts at HC Wainwright published 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 in February. The hash rate increased 8% month-over-month to 125.7 EH/s, representing 22% of the network's total hash rate at the end of the month, up from 21% in January, the company said. Despite this increase, there was a 12% month-on-month decline in total BTC production, with miners producing 5,175 BTC compared to 5,848 BTC in January.
The decline in BTC production was attributed to a 52% month-on-month drop in transaction fees and a 9% increase in network difficulty, along with the shorter duration of February compared to January. Additionally, miners sold 60% of the BTC they produced in February, down from 65% sold in January.
Bitcoin's recent price rally took a slight pause on Tuesday, with the cryptocurrency currently falling around 0.3% to $71,929.
On the investment front, HC Wainwright noted that BTC ETFs in the US experienced record inflows. Last week, these funds attracted more than $2.2 billion in net inflows, surpassing the previous week's record of $1.7 billion. This surge in interest has driven BTC prices to new heights, with the cryptocurrency trading above $72,000 for the first time, after surpassing its previous all-time high of $69,000 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, in which all three of BlackRock's funds (the Global Allocation Fund, the Strategic Income Opportunities Fund and the Strategic Global Bond Fund) can now make allocations to ETFs. BTC spot. HC Wainwright also highlighted that MicroStrategy has continued to invest in BTC, purchasing an additional 12,000 BTC for approximately $821.7 million.
Last week, the price of BTC rose by 9.4%, almost reaching its previous all-time high set in November 2021. The network's hash rate grew by 8.0% week over week, while the difficulty of the network remained unchanged. Despite the positive BTC price movement, mining stocks saw a weekly drop of 1.4%.
HC Wainwright echoed today's comments, saying the recent underperformance of mining stocks represents a “compelling buying opportunity.” The firm attributes the underperformance to the movement of capital from mining stocks to BTC spot ETFs, concerns about miners' income after the Bitcoin halving, and a correction after mining stocks surpassed BTC price gains in Q4 2023. The company maintains a positive outlook on the BTC Mining Sector, noting that miners significantly outperformed BTC in 2023.
