Bitcoin miner earnings hit all-time highs last week as the price for the largest cryptocurrency continues to trade around record levels.
Daily miner revenue reached US$78.6-million on 7 March, data from CryptoQuant shows, surpassing the peak set in April 2021 during the last crypto bull market. Bitcoin miners earn money in the form of new coins awarded to them for validating and adding transactions to the blockchain network, as well as from fees paid to them by users.
The spike in miner revenues comes amid a 70% rally for bitcoin so far this year.
After a prolonged slump tied to a string of crypto scandals and bankruptcies in 2022, the price of bitcoin began rallying last year and received a further boost from a net inflow of approximately $9.5-billion into a crop of US spot bitcoin exchange-traded funds that debuted on 11 January.
Bitcoin’s upcoming halving in April, which will cut miner rewards in half and decrease the coin’s supply growth, has also encouraged wagers on rising prices.
For miners, the backdrop is a marked turnaround from the depths of the crypto winter, when some succumbed to bankruptcy. For instance, the Valkyrie Bitcoin Miners ETF — which includes companies such as CleanSpark and Marathon Digital Holdings — has more than doubled over the past 12 months.
Firms are rushing to position themselves for success. Since February 2023, 13 of the top mining companies have placed orders for over $1-billion worth of specialised computers.
Record high
Meanwhile, bitcoin hit a record high on Monday above $72 000, as the biggest cryptocurrency’s surge showed no signs of slowing down. Bitcoin was last up 4.4% at $72 649 after reaching as high as $72 739.
The world’s most valuable cryptocurrency has been boosted by the flood of cash into new spot ETFs and hopes that the US Federal Reserve will soon cut interest rates.
“The recent surge in bitcoin’s value … underscores the remarkable strength and resilience of the leading cryptocurrency. This achievement not only marks a significant milestone but also reflects the continued confidence and demand in the market,” Bitfinex analysts said in a research note.
Flows of capital into the 10 largest US spot bitcoin ETFs slowed to a two-week low in the week to 8 March, but still reached almost $2-billion, LSEG data showed.
“Bitcoin has started the week with a surge, dragging the rest of the cryptocurrency space higher with it,” DailyFX strategist Nick Cawley said.
Supply of bitcoin, which is limited to 21 million tokens, is set to get tighter in April, when the so-called “halving” event takes place. Every four years, the rate at which new supply is released into circulation, as well as the reward for crypto miners, is halved, which tends to support the price.
Since bitcoin has less than two decades as a financial asset, predicting its price trajectory remains extremely challenging. Just months after retail exuberance helped drive bitcoin to its previous record in November 2021 the cryptocurrency crashed, taking half the crypto industry with it.
Digital asset trading
Britain’s financial watchdog on Monday became the latest regulator to pave the way for digital asset trading products after saying on Monday it will now permit recognised investment exchanges to launch crypto-backed exchange-traded notes.
The UK regulator said these products would be only available for professional investors such as investment firms and credit institutions authorised to operate in financial markets, the Financial Conduct Authority (FCA) said in a statement.
Read: Bitcoin tops $70 000 for the first time
The FCA warned that crypto exchange-traded notes — bonds issued by financial institutions that track the performance of underlying assets — could harm retail investors. Nonetheless, demand is picking up across the investment community.
Asset managers now hold the biggest bullish position in bitcoin futures on record, weekly data from the US Commodity Futures Trading Commission showed. In the week to 5 March, the net long position held by asset managers — usually interpreted as covering holdings of institutional investors such as mutual funds and pension funds — rose to 15 531 lots, worth $5.5-billion based on the current bitcoin price.
Ether rose 3.97% to $4 062.07, around its highest for two years. Speculation that US regulators may approve the listing of spot ether ETFs this year has driven the price up 75% this year.
In crypto stocks, shares of Coinbase rose 2.8%, while crypto miners Riot Platforms and Marathon Digital fell 2.2% and 6.1%, respectively. — Sidhartha Shukla, Philip Lagerkranser and David Pan, (c) 2024 Bloomberg LP, with additional reporting by Hannah Lang, Harry Robertson and Amanda Cooper, (c) 2024 Reuters