Bitcoin Miners Hit Rock Bottom? Valuations Slip Below Key Average For First Time In A Year

Bitcoin BTC/USD mining stocks just hit a rough patch. According to JPMorgan analyst Reginald L. Smith, U.S.-listed miners are now trading at just 1.35x their proportional share of the four-year block reward opportunity – marking the first time in nearly a year that valuations have fallen below the 1.7x historical average since January 2022.

Bitcoin Price Drops, Mining Competition Rises

The culprit? A combination of Bitcoin's price decline and rising mining competition. March saw Bitcoin’s average price drop 10% to $85,600, briefly dipping as low as $79,000.

Meanwhile, network hashrate, a key measure of mining difficulty, climbed to an average of 811 EH/s, up 35% year-over-year. With more miners vying for a slice of the pie, daily mining profitability continues to erode.

Mining Stocks Struggle, Market Cap Takes A Hit

Mining stocks have taken it on the chin. From Feb. 28 to March 15, the combined market cap of the 14 U.S.-listed miners JPMorgan tracks fell 13% – recording a $3 billion hit.

Just one miner outperformed Bitcoin's price movement in that span. Cipher Mining Inc CIFR led the losers, dropping 25%, while Argo Blockchain PLC ARBK was the lone bright spot, eking out a 1% gain.

US-Listed Miners Hold Market Share

Despite the challenges, U.S.-listed miners have held their ground in terms of market share. They added roughly 1 EH/s since late January, keeping their slice of the global hashrate steady at around 30%.

Bitfarms Ltd BITF and CleanSpark Inc CLSK led the charge, while Core Scientific Inc. CORZ and Hut 8 Corp HUT saw slight declines in self-mining capacity.

For now, the sector is caught in a squeeze—declining Bitcoin prices and increased competition are making mining a tougher business. With valuations slipping below long-term averages, the question remains: Are investors overreacting or is this a sign of tougher days ahead?

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