Bitcoin (BTC) Mining Stocks Have Crashed by 60% as BTC Price Crashed and Sentiment Weakened

Mara Holdings, formerly known as Marathon Digital, the biggest Bitcoin mining stock, has fallen by 60% from its highest point in November.

Bitcoin mining stocks have dropped sharply in the past few months as sentiment in the crypto market weakened and BTC crashed.

Most of these companies also saw their market caps collapse sharply. For example, Mara Holdings (NASDAQ:MARA), formerly known as Marathon Digital and the biggest Bitcoin mining stock, dropped 60% from its highest point in November. At the time, the stock hit $10.7, while its market cap rose to $8.82 billion.

However, the stock has since dropped to $4.2, leading to a $4.6 billion wipeout in market cap. At present, the stock is valued at $4.2 billion.

Another Bitcoin mining stock, Riot Platforms (NASDAQ:RIOT), saw its stock price fall from $16 to $8, while its market cap dropped from nearly $5 billion to $2.78 billion.

At the same time, Core Scientific (NASDAQ:CORE), a Bitcoin mining company that has diversified into AI data centers, dropped from $18.6 to $8.5, with its market valuation falling from $5.1 billion to $2.5 billion.

Other mining companies, such as CleanSpark (NASDAQ:CLSK), Bitdeer Technologies (NYSE:BTDR), Hut & Mining (NASDAQ:UMAP), Cipher Mining (NASDAQ:CIFR), and Bitfarms (NASDAQ:BITF), also declined.

Together, all the 24 Bitcoin mining companies that Companies by Market Cap tracks are valued at $23 billion.

Why Bitcoin Mining Stocks Crashed

These companies fell due to two main reasons: declining Bitcoin prices and rising mining difficulty following last year’s halving event.

Bitcoin prices crashed from the year-to-date high of $109,480 in January to $85,150. There is a risk that they could fall further now that a rising wedge pattern has formed, a popular bearish sign in the market. A wedge pattern is an indicator that a price trend is losing momentum and may soon reverse.

Bitcoin mining stocks are highly correlated with BTC prices because they mine and sell their coins to exchanges and other large companies. At the same time, the difficulty of Bitcoin mining and the hash rate, which measures computational power, have both reached record highs. A hash rate is a figure that looks at the total computational power in a network. Miners use it to validate transactions and secure the network.

Bitcoin’s mining difficulty rises almost daily, mostly occurring four years after each halving event. Most of these companies also saw a sharp decline in Bitcoin mined after the halving event. For instance, MARA’s mined coins dropped from 692 in March 2024 to 590 in June last year. Its mining output then rose to 850 in February this year.

Will BTC Mining Stocks Rebound?

The future of Bitcoin mining stocks is closely linked to Bitcoin’s performance in upcoming months, which, despite recent crashes, may see recovery later this year.

The risk, however, is that it may crash in the next few weeks. It has formed a rising wedge pattern, a popular bearish sign in the market. Bitcoin has also formed a death cross pattern as the 50-day and 200-day weighted moving averages (WMA) have crossed each other. This is another bearish signal that could lead to further price declines.

Therefore, Bitcoin prices will likely fall to the next key support at $73,730, its highest point on March 14. If this happens, there is a likelihood that these Bitcoin mining stocks will drop also in the near term. They are then expected to bounce back later this year as BTC recovers.