Crypto mining firms have seen double-digit drops after Bitcoin (BTC) experienced its most significant decline in nearly four months.
Over the weekend, the value of Bitcoin plummeted to as low as $40,000 after reaching a high above $43,900, causing a ripple effect across the mining industry.
Numerous mining companies witnessed double-digit drops in their stock prices.
TeraWulf (NASDAQ: WULF) tumbled as much as 23.5% in trading, Bit Digital (NASDAQ: BTBT) experienced a decline of 19.7%, Marathon Digital (NASDAQ: MARA) dropped 15.2%, and Riot Platforms (NASDAQ: RIOT) saw a 14.5% decrease at its lowest point.
The sharp decline in Bitcoin’s price, coupled with the leveraged nature of mining operations, explains why mining companies suffered even more substantial losses than the cryptocurrency itself.
These firms generate Bitcoin through mining activities and hold Bitcoin on their balance sheets, meaning that a drop in Bitcoin’s value adversely affects both their income statements and balance sheets.
Investors are also expressing concerns about Bitcoin’s upcoming halving, set to occur in 2024.
During this event, miners will receive only half the number of Bitcoins per block as they did previously, leading to lower profit margins for mining companies across the board.
The sudden drop in Bitcoin’s price raises questions, as it occurred late in the weekend when trading typically exhibits lower liquidity.
It is noteworthy that last week’s positive economic news, such as a robust jobs report, would have typically impacted the market earlier.
Meanwhile, some have attributed the decline in Bitcoin’s price may have been influenced by funding rates of perpetual futures contracts.
These rates, collected every eight
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