In July, Bitcoin mining stocks continued their positive 2023 run, with the top 10 stocks by market cap gaining 23.10% on the month on average, with a year-to-date return of 277.34%.
In comparison, the Bitcoin price lost 3.59% in July as it failed to build support above $30,000 for the sixth week since June. Despite a difficult July, the BTC price is still up 78.88% in 2023.
The decline in Bitcoin’s price reduced the profitability of miners. To make conditions more challenging for miners, the mining difficulty reached a new all-time high, reducing miner profitability.
Historical trends show that the network’s hash rate could continue to rise leading up to the halving on April 26, 2024 as miners increase their hashing power by installing new efficient machines.
Besides adding to their processing power, miners are also adopting other hedging techniques like selling Bitcoin futures to lock in current prices.
As the network’s hash rate is expected to increase through the year as miners reinvest in new machines and adopt other hedging techniques, miner profitability and stock valuations will continue to face pressure in the lead-up to the event.
Bitcoin hash rate projected to grow until halving
While the BTC price has increased by around 80% year-to-date, the mining difficulty has also increased by 51%, offsetting the rise in profitability from the price surge.
In mid-July, Bitcoin’s difficulty set a new all-time high of 53.91 trillion units. The increase in difficulty triggered a capitulation event in the sector, which was already reeling under pressure at the start of the month.