Bitcoin Rally in 2023 Helped Crypto Firms to Contribute to Wall Street

The world’s largest cryptocurrency Bitcoin (BTC) made substantial gains surging by 160% this year in 2023. The rally in Bitcoin and the broader crypto market has also helped some of the US-listed crypto companies recover from the wounds of the 2022 crypto winter.

While Bitcoin experienced a notable 150% rally throughout the year, shares of Coinbase, MicroStrategy, and the Grayscale Bitcoin Trust, closely linked to the digital currency, performed even more impressively, surging over 300% in value. Bitcoin miner Marathon Digital saw an extraordinary increase of 688%.

These stocks not only outpaced the primary cryptocurrency but also emerged as some of the top gainers in the entire US market. Within the realm of publicly traded US businesses with a market value of at least $5 billion, the four bitcoin-associated stocks ranked among the eight best performers, as per FactSet.

The resurgence in the crypto market marks a significant recovery from the challenges of 2022 when coin prices plummeted, dragging related equities down. A year marked by hedge fund collapses, crypto lender failures, and substantial losses at miners reached a critical point in November 2022 when crypto exchange FTX faced bankruptcy, leading to the arrest of founder Sam Bankman-Fried on fraud charges. As reported by Coinspeaker, the crypto hedge funds also witnessed a strong recovery this year and are looking ahead to a bullish 2024.

Turnaround for Bitcoin Miner Marathon Digital in 2023

Around this time last year, Marathon faced severe challenges, navigating through a quarter that concluded with a staggering loss of nearly $400 million on sales amounting to just $28.4 million. Factors contributing to this struggle included the decline in bitcoin prices, a power outage at the Montana facility, and Marathon’s financial ties to the bankrupt miner Compute North.

Marathon CEO Fred Thiel reflected on those challenging times, describing them as “pretty dire”. Bitcoin mining inherently involves high energy costs due to the operation of supercomputers. When bitcoin prices drop, miners face a significant reduction in revenue from selling mined coins, coupled with the ongoing burden of substantial energy bills.

However, the company managed to weather the storm by selling equity and being in the fortunate position of having minimal debt, aside from a convertible note.

Fast forward to 2023, and the company’s fortunes have taken a positive turn. In the third quarter, Marathon reported a net income of $64.1 million, with revenue experiencing a substantial year-over-year increase to reach $97.8 million. Riding on this success, the company has entered an expansion phase. Recently, Marathon announced the acquisition of its first two fully owned bitcoin mining sites, one in Texas and one in Nebraska, for a total of $178.6 million.

These acquisitions have significantly bolstered Marathon’s mining portfolio, increasing its capacity by 56% to 910 megawatts. “By vertically integrating, we take the profit margin for the third party out and we can run the site the way we want to run it,” Thiel said. Thiel aims to fortify the company’s financial stability for potential downturns in Bitcoin prices.

Other Top Performing Crypto Firms

Outside of the crypto mining firms, Coinbase emerged as the best-performing US crypto stock in 2023, surging 386% amid challenges faced by Binance. Coinbase’s market share increases during non-US trading hours. The company’s CEO, Brian Armstrong, sees this as validation of their compliance-focused strategy.

Coinbase’s revenue diversification includes Ethereum and other crypto assets, reducing reliance on bitcoin. The Grayscale Bitcoin Trust records a 330% gain in 2023, benefiting from a bitcoin rally and potential regulatory clearance for an ETF conversion. GBTC’s discount to net asset value narrows, and Barry Silbert resigns as chairman.

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2023-12-28 13:09