bitcoin

Bitcoin mining post presidential elections

November 2024 was an unforgettable month for Bitcoin reaching breathtaking all-time highs above $90,000.

This unprecedented high was associated with the aftermath of the U.S. presidential election, whose outcome fueled optimism within the financial markets.

Investors speculated that the newly elected administration would adopt a more favorable stance toward cryptocurrencies, encouraging innovation and regulatory clarity in the industry.

A close friend of mine joked: "You have to understand. All financial crime is legalized and endorsed by the White House with Trump in office. Nothing is too insane now"

During the first two weeks of November, Bitcoin's price maintained an impressive average of $79,000, a 21% increase compared to October.

This rapid panic buying not only caught the attention of seasoned investors but also attracted new participants eager to capitalize on the burgeoning market.

As news outlets highlighted the development of crypto regulation and adoption, conversations around Bitcoin intensified, leading to increased trading activity and heightened interest across various age demographics.

The soaring prices and growing enthusiasm proved a pivotal shift in the perception of Bitcoin as a serious financial asset, a new era of investment potential, and digital currency adoption.

This rally came in with an annualized volatility spike of +70% in November, up from October's 42%, reflecting the optimistic sentiment in the crypto markets.

November has been overwhelming due to many price changes, and I have been busy working on VIA 2.0. It has been hard to keep up. To make it easier, I have decided to write multiple articles about Bitcoin instead of one long article.

Why?

A lot of information to share regarding crypto and other financial markets, and new updates come in quickly. Members of this Discord receive real-time updates about the markets, including crypto, stocks, options, and more.

I will release a new article covering BTC & other crypto later. Don't worry, in case you're not that interested in BTC mining and US mining companies and their stocks

How about the miners?

Mining stocks reflected the rise of Bitcoin, with the total market capitalization of 14 U.S.-listed Bitcoin miners increasing by 33%, reaching $32 billion by mid-November. These companies, which control 28% of the global network hash rate, added 5 EH/s of mining capacity. Leading firms such as Marathon Digital Holdings (MARA) contributed 3.2 EH/s, while Cipher Mining added 1.4 EH/s, driving this growth and maintaining a record-high network share, according to the research of JPMorgan

Geopolitical ignored markets remain unfazed

On November 21, Russia expressed its concerns about its nuclear weapons, raising alarm during the ongoing conflict in Ukraine. This announcement came at a time when Western countries were discussing whether to send advanced military equipment to Ukraine. These discussions are complex because they involve both the effectiveness of the weapons and the impact on regional stability. Supplying advanced arms could increase tensions between Russia and Ukraine, making an already unstable situation even more difficult.

Despite these dangers, financial markets appeared largely undeterred. The recent rally in Bitcoin and the Dow Jones Industrial Average reaching a new high indicate investors are leaning towards optimism rather than caution.

Yet, not all economic indicators painted a positive picture. Last week, the euro/dollar exchange rate fell below the 1.05 mark, a significant drop highlighting a persistent flight to safe-haven assets. This shift is largely driven by ongoing concerns about sluggish economic data from Europe, coupled with escalating geopolitical uncertainties that continue to weigh heavily on investor sentiment.

On one side, financial markets are thriving, fueled by optimism and excitement among investors. The atmosphere feels lively, like a carnival where people can quickly make money. However, serious issues, such as geopolitical tensions and economic inequality, remind us that not everyone benefits from this prosperity.

Amid these ups and downs, Bitcoin stands out with its impressive growth. Its rise highlights its importance as a valuable investment and as a trend that has caught public interest. As I explore the world of cryptocurrency and meme tokens, I see how even the most bizarre ideas can become valuable assets, turning items like meme tokens into symbols of high worth, membership in a community (cult), and potentially gaining online friends.

Mining sector analysis

As November draws close, the Bitcoin mining industry shows adaptability and growth despite the challengers, from the April halving event to market competition. Miners are not just keeping pace; they're innovating and thriving.

Post-halving

The April 2024 halving event reduced the daily Bitcoin reward from 900 to 450. Despite this, many U.S.-listed miners showcased impressive production growth in October.

In October, top producers Marathon Digital Holdings (MARA) and CleanSpark (CLS) led the pack, mining the most Bitcoin.
Riot platform (RIOT) and Iris Energy (IREN) mind more Bitcoin in October than in March, the last full month before the halving. That reflects their operational efficiency and ability to adapt to reduced rewards.
U.S.-listed miners accounted for approximately 21.4% of total Bitcoin mined year-to-date.

Efficiency is essential for profiting from Bitcoin mining. The industry measures miners' performance by examining the BTC they mine for each exahash of capacity.

Top Performers: In October, Riot Platforms, CleanSpark, and Bitfarms were the most efficient miners, achieving the highest BTC per EH/s.

Seasonal Changes: Efficiency dropped in the summer due to high energy costs and reduced operations. However, miners recovered well in the fall.

As the global hash rate increases, mining difficulty rises, which leads to a natural decrease in BTC per EH/s over time. This makes running efficient operations even more important.

Strategic Bitcoin Holdings: The HODL Factor

Bitcoin miners are choosing to keep some of the Bitcoin they mine (HODL balance) to take advantage of a potential future rise in Bitcoin's price.

The Largest Holder: Marathon Digital Holdings (MARA) led the pack with a staggering 27,562 BTC (~$2.6 billion). This positions MARA not just as a miner but also as a large Bitcoin holder.
Comparative Context: MARA’s holdings are impressive, but they pale compared to companies like MicroStrategy, which holds 386,700 BTC ($25 billion). Even so, these balances reflect the industry’s bullish outlook on Bitcoin’s future.

HODLing adds an element of speculation to miners' operations. While it reflects their strong confidence in Bitcoin’s long-term value as they're willing to put their money where their mouth is, it also exposes companies to volatility. Striking the right balance between liquidating BTC for operational expenses and retaining it for future gains is important for these companies.

Made in the USA

US-listed miners have steadily increased their global network share, reaching record highs in November.

U.S.-listed miners now account for about 28% of the global hash rate, an increase of 670 basis points since April. In October, they added 5 EH/s of capacity, demonstrating their growth and efficiency compared to the broader market.

U.S.-listed miner share of the network hashrate

U.S.-listed miners continue to excel in production and operational efficiency:

Leaders in October: Marathon Digital Holdings (MARA) and CleanSpark (CLSK) mined the most Bitcoin, showcasing scalability and resilience post-halving.
Efficiency Standouts: Riot Platforms (RIOT), CleanSpark (CLSK), and Bitfarms delivered the highest BTC per EH/s, highlighting their operational prowess.

U.S.-listed miners now control ~28% of the global network hashrate—a record high, up by 670 basis points since April. This dominance reflects their ability to attract capital and deploy cutting-edge technologies.

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Yes, options data, such as dark pools, options gamma, unusual flow, etc., are also included.

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Black Friday sales for 70% discounts will be extended. I was supposed to release 3 articles in the past 2 weeks but writing took so long and I was also busy

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Bitcoin Price & Network Hashrate

Bitcoin's price dynamics often draw attention, but the underlying network's computational power, measured by the hash rate, is equally important to understand. The figure below illustrates the two key metrics using a 7-day rolling average

The Bitcoin price, shown by the black line, is the value of Bitcoin in USD. The blue area's network hash rate shows the computing power used to secure the Bitcoin network.

This hash rate reflects the combined efforts of miners worldwide. It directly indicates how strong the network is against attacks and how efficiently it can process transactions.

The average Bitcoin price surged by 21%, strong market momentum & increased investor demand.
The network hash rate rose by 2%, a more measured increase, while mining activity responded to the price growth. There is often a lag as new mining equipment and infrastructure take time to deploy.

The price of Bitcoin and its hash rate are closely connected. When Bitcoin's price goes up, it encourages miners to invest more in the network, making it more secure and efficient.

On the other hand, a strong and secure network builds trust among users and investors, which helps support the price (according to Bitcoin believers) and the narrative.

In this case, the hash rate and price have steadily increased. This shows that the network is growing to handle increased demand.

Block Reward opportunity

Bitcoin economic incentives are important for miners who secure the network and validate transactions. Two metrics, Reserve Nominal Value, and the 4-year rolling block reward revenue opportunity, provide insights here.

The Proved Reserve Nominal Value measures the potential revenue from Bitcoin left to be mined. It is calculated by multiplying the prevailing Bitcoin price by the number of unmined coins at a given date.

In April 2021, the nominal value of the remaining Bitcoin reached ~$146 billion, driven by Bitcoin prices in the low $60k range around 2.3 million coins still to be mined.

As of November 15, 2024, the nominal value of the remaining approximately 1.2 million Bitcoins was $111 billion, marking the highest level since early 2022 and representing a 27% increase from the end of October.

Four-Year Rolling Block Reward Revenue Opportunity

This metric is of considerable importance to both miners and investors in the cryptocurrency market. Specifically, it provides insights that are closely aligned with the typical lifespan of Application-Specific Integrated Circuit (ASIC) mining hardware, which often lasts anywhere from several months to a few years depending on the model and the conditions of use.

Furthermore, the metric takes into account the periodic reduction in the network's supply, often referred to as "halving" events, which happens around every four years for Bitcoin. These supply reductions can significantly impact the overall availability of coins and, consequently, their market value.

By understanding how this metric operates in conjunction with hardware lifespan and supply dynamics, miners and investors can better strategize their operations, optimize their investments, and enhance their overall returns. Mining is very competitive.