Bitcoin miners hit with downgrades, winter storm
While the bitcoin hashrate has crashed, experts say this is a temporary reaction to the weather.
Amid mounting fears that bitcoin is entering a bear market, bitcoin miners are also facing challenges, including difficult pivots to AI and a winter storm that forced some miners to shutter their operations.
KBW analyst Stephen Glagola downgraded several companies, including Bitfarms, Bitdeer, and HIVE, to “market perform” from “outperform.” The stocks all dipped in early trading but recovered those losses in Tuesday’s session.
Several bitcoin miners have pivoted to AI to mitigate losses from bitcoin’s lackluster performance and secure steadier cash inflows, but not all have been able to transition successfully.
CoinDesk reported that Glagola’s downgrades were driven by the fact that “while the industry’s pivot toward high-performance computing (HPC) and AI hosting is compelling, the path to monetization is fraught with execution risks and long lead times.”
Specifically, CoinDesk noted:
Bitfarms: “The market has already priced in the potential of its 120-megawatt (MW) Sharon, Pennsylvania, site.”
Bitdeer: Its current small scale, concentrated shareholder control, and “related-party exposure” were marked as a concern.
HIVE: Its reliance on partners makes it “sub-optimally positioned” next to pure-play data center competitors.
Additionally, the winter storm currently battering the US is putting pressure on their operations.
SwanDesk CEO Jacob King posted on X that bitcoin’s hashrate has crashed to 690 exahashes per second from 1.13 zetahashes per second in just two days, “the largest drop ever recorded.”
“Large numbers of miners have powered down their machines. With prices falling and operating costs fixed, many will be forced to sell BTC to stay solvent, accelerating the downward spiral,” King wrote.
Timot Lamarre, director of market research at Unchained, told Sherwood News that given the prevalence of bitcoin miners in Texas and the ability to curtail power usage by switching off when demand drives energy prices higher, the dip in bitcoin hashrate is likely temporary.
Jessy Gilger, a senior adviser at Gannett Wealth Advisors, said that this record drop in hashrate isn’t a network collapse.
“Bitcoin’s difficulty adjustment is a built-in balancing factor that has managed these fluctuations for 17 years, and the network will inevitably stabilize as the weather clears,” he said.
