Amid increasing concerns about a potential bear market for bitcoin, the challenges faced by bitcoin miners have amplified, compounded by a severe winter storm that has forced some operations to temporarily cease. KBW analyst Stephen Glagola has recently downgraded the ratings of several bitcoin mining companies, including Bitfarms, Bitdeer, and HIVE, shifting their status from “outperform” to “market perform.”
Initially, these stocks showed a decline in early trading, but managed to recover losses later in the session. In light of bitcoin’s sluggish price performance, some miners are attempting to pivot towards artificial intelligence (AI) and high-performance computing (HPC) as a means to secure more reliable revenue streams, although not all companies have found success in this transition. According to CoinDesk, Glagola’s downgrades stem from concerns over monetization risks and protracted lead times inherent in the industry’s pivot.
Specifically, the report highlighted various issues: Bitfarms has seen its potential for its 120-megawatt site in Sharon, Pennsylvania, already discounted by the market. Bitdeer faces challenges due to its small scale and concentrated shareholder control, while HIVE’s reliance on partners places it at a disadvantage against competitors specializing in pure data center operations.
The ongoing winter storm is exacerbating these operational pressures. Jacob King, CEO of SwanDesk, noted on X that bitcoin’s hashrate plummeted dramatically, dropping to 690 exahashes per second from 1.13 zetahashes per second within just two days—marking the largest recorded decline to date. King remarked, “A large number of miners have powered down their machines. With prices falling and operating costs remaining fixed, many will be compelled to sell BTC to remain solvent, thus accelerating the downward spiral.”
Despite these challenges, industry experts remain cautiously optimistic. Timot Lamarre, director of market research at Unchained, emphasized that the concentration of miners in Texas allows for power usage to be curtailed when demand spikes, suggesting that the recent drop in hashrate may only be temporary. Jessy Gilger, senior adviser at Gannett Wealth Advisors, reassured that the drastic drop in hashrate does not signify a network collapse, pointing to bitcoin’s built-in difficulty adjustment, which has balanced fluctuations for 17 years. Experts predict that the network will stabilize as weather conditions improve and operational capabilities are restored.
