Public Miners See Revenue Bounce, Increase Bitcoin Holdings
Public miners are holding more bitcoin on their balance sheets thanks to rising hash rate, hash price and mining revenue. More machines are coming online as revenue increases from transaction fees.
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Public Miner Update
Lately, we’ve written about the rise in Bitcoin transaction fees due to ordinals and brc-20 tokens, but we haven’t focused as closely on one of the main beneficiaries: miners. In this post, we’ll highlight how the mining industry is doing after a substantial rise in their top-line revenue over the last couple months.
For starters, monthly production updates throughout March and April show that bitcoin holdings have stabilized and are slightly increasing again for the top public miners who report it. This is the first meaningful turn in a larger trend of public miners who were selling off bitcoin holdings over the last year. The price rally, rise in hash price and rise in transaction fees have put less sell pressure on miners, allowing them to hold more of the bitcoin they produce.
At the same time, there has also been a relentless rise in hash rate as new rig deployments come online. Although we have to account for some missing data points across miners, there’s been over 15 EH/s added to the network since December. The biggest additions come from Marathon Digital Holdings, Iris Energy, Riot Platforms, HIVE Blockchain and Terawulf. Marathon expects a total of 23 EH/s by the middle of this year, Riot expects 12.5 EH/s in 2023 and TeraWulf expects 5.5 EH/s in the coming weeks. Some of the largest public miner expansion plans that have been in the works for years, are now closer to being completed.
That growth has contributed to the total Bitcoin network hash rate consistently reaching around 350 EH/s in this latest rally.
After more than a year of declining monthly revenues, we’ve had five straight months of rising monthly revenue for miners in USD terms. It’s been much more lucrative for miners during this time with hash price nearly doubling in this period. This is a significant change in both current miner revenue and when comparing current miner revenue relative to the much lower revenue over the last 365 days. One of our favorite cyclical metrics for gauging the trend in the mining industry is the Puell Multiple, measuring current revenue relative to the 365-day moving average, which currently shows miners as in a fairly neutral part of the Bitcoin cycle. We’ve seen a period of stabilization and growth for the industry after a tough period of capitulation.
Transaction fees have played a role in that revenue rise throughout March and April, but will be much more noticeable in miners’ May revenue. Weekly transaction fees have exploded to cycle-peak levels in USD terms because of the brc-20 craze.
As for public miner equity performance, volatility has come back to the upside with Bitcoin miners being one of the best performing industries since the $15,000 bottom at the turn of the year. Below, we’re showing a dynamically weighted index (based on daily market capitalization) of select public miners in both USD and BTC terms. Although still well under their starting point at the beginning of 2022, this miner index shows public miners up 167% in USD terms and up 63% in BTC terms over the last five months.
There’s only been a couple public miners to underperform bitcoin over this time, but the clear winners have been Riot, Bit Digital, Iris and Marathon all up over 150%. We’ve highlighted our framework that a hash price bull market or bullish period means Bitcoin miners typically outperform bitcoin. That’s certainly what we’ve seen this year so far.
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Our hash price framework, which we state in many of our mining issues, is as follows:
Hash price bull market = Bitcoin miners outperform bitcoin
Hash price bear market = Bitcoin miners underperform bitcoin
Note: Hash price divides daily miner revenue per 1 TH/s by hash rate, as first coined by the team at Luxor.
With hash price flying more than 100% off its lows due to rebound in the BTC/USD exchange rate and along with the mempool mania of recent weeks, miner outperformance has been the theme of 2023. Particularly, the firms that led the pack in terms of equity returns are the ones that delivered on their hash rate buildout roadmaps and have proportionally outpaced the growth in network hash rate.
Public Miner Spotlight
Now that we've explored the general mining landscape, let's delve deeper into some of the largest publicly traded mining companies and examine the latest updates on their forward strategies, hash rate buildout and production numbers. We will cover the latest details for miners that reported quarterly results recently.
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