Main Points:
- U.S.-listed Bitcoin mining companies have reached a record 26.6% share of the global hashrate.
- This surge is driven by rising stock prices and increased investment in high-performance computing (HPC) and AI opportunities.
- Major contributors include Riot Platforms, Bitfarms, and CleanSpark, with Cipher Mining leading in performance with a 44% increase.
- Investment firm Bernstein highlights the impact of AI-related transactions on the sector’s growth.
Article Summary:
In a significant development for the cryptocurrency sector, U.S.-listed Bitcoin mining companies have attained a record 26.6% share of the global hashrate as of July 2024. This milestone reflects the growing influence and market capitalization of these companies, with their collective market value rising by 29% since the end of June.
JP Morgan’s recent research report highlights this unprecedented growth, attributing it to increased investments in artificial intelligence (AI) and high-performance computing (HPC). The report notes that the surge in stock prices of pure-play and HPC-involved mining companies has played a crucial role in this expansion. Analysts Reginald Smith and Charles Pearce from JP Morgan pointed out that this record share marks a 2.4% increase since the end of June and a 5.6% rise since the last Bitcoin halving.
The hashrate, representing the total computational power used for mining and transaction processing on proof-of-work (PoW) blockchains, serves as an indicator of industry competition and mining difficulty. The U.S.-listed mining companies’ ability to secure a larger share of the hashrate underscores their growing dominance in the sector.
The total market capitalization of the 14 U.S.-listed Bitcoin mining companies tracked by JP Morgan is now trading at a level equivalent to 2.6 times the four-year block reward, a historical high. This valuation reflects market optimism about the potential for Bitcoin mining facilities to leverage AI and HPC opportunities, thereby expanding their use cases and enhancing profitability.
During June, the hashrate share of these companies increased by 1%, although it remains about 60 exahashes per second (EH/s) below pre-halving levels. The addition of 17 EH/s in capacity by U.S. mining firms in June, led by Riot Platforms, Bitfarms, and CleanSpark, contributed significantly to this growth.
Notably, Stronghold Digital Mining was the only company in the sector that underperformed Bitcoin during this period, with an 8% decline. In contrast, Cipher Mining led the pack with a remarkable 44% increase in its stock price.
Bernstein, another investment firm, echoed JP Morgan’s positive outlook, emphasizing the importance of AI-related transactions in driving the sector’s growth. Recent AI-related deals, such as Core Scientific’s 12-year contract with CoreWeave and Coatue Management’s $150 million investment in Hut 8, have been pivotal in boosting the sector’s prospects.
