Analysts at research and brokerage firm Bernstein have highlighted the unanticipated advantages accruing to cryptocurrency miners amidst a period of stable Bitcoin prices. Despite minimal fluctuations, with Bitcoin trading within the range of the high $50,000s to low $60,000s, mining operations have thrived, particularly following Bitcoin’s fourth halving event on April 20.
The halving event, which halved the reward for mining Bitcoin transactions, was initially anticipated to strain the mining industry. However, the subsequent period of “flattish” price action has alleviated competitive pressures, enabling miners to sustain profitability even as operational costs have surged.
This favorable scenario has prompted adjustments in mining dynamics, including a notable 10% decline in the Bitcoin hash rate. From a seven-day moving average of 638 EH/s to 579 EH/s, this decrease has been observed leading up to the most recent difficulty adjustments.
Hash rate, a pivotal metric, denotes the daily revenue a crypto miner can expect from 1 PH/s or 1 TH/s of hashing power.
Consequently, the reduction in hash rate has translated into longer average block times, hovering at approximately 10 minutes and 36 seconds, slightly surpassing the Bitcoin protocol’s target duration of 10 minutes. Notably, the mining difficulty, a critical measure ensuring the production of new blocks every ten minutes on average, witnessed a 6% decline to 83.1 trillion hashes, marking one of the most significant decreases since the crypto winter of December 2022.
“Stable Bitcoin prices prove advantageous for incumbent lower-cost miners,” affirmed Bernstein analysts. “This stability facilitates market share consolidation and enables aggressive capital expenditure and merger and acquisition strategies, unburdened by the incessant need to ramp up expenditures to sustain market position.”
Among the leading miners, CleanSpark (NASDAQ: CLSK) and Riot Platforms (NASDAQ: RIOT) have emerged for their exemplary production efficiency, bolstered by robust Bitcoin balances and healthy cash reserves. Notably, both entities have expanded their operations, with Riot poised to triple its current capacity to 31.5 EH/s at a new facility in Corsicana.
Similarly, CleanSpark is actively acquiring new sites in Mississippi and Wyoming, augmenting its existing 75MW of capacity.
Bernstein anticipates that these industry frontrunners will further consolidate their market share through a combination of organic growth and strategic acquisitions. Consequently, the report forecasts CleanSpark and Riot to collectively command approximately 6% of the network by 2025, marking a notable increase from the current figure of around 4.7%.
