Shares of Cipher Mining (US:CIFR), the pioneering cryptocurrency miner, surged 10.7% in Friday’s trading session, encapsulating a staggering 483% rally in 2023 thus far.
This dramatic surge follows a doubling of Bitcoin's (BTC) price against the U.S. dollar this year, a hard-earned recovery from the pandemic-induced lows. Peer stocks also mirrored this optimistic trend, painting a vibrant picture for the entire sector.
Cipher Mining's performance has been a sight to behold, despite a slight 27% dip in the number of Bitcoins mined in June 2023 -- from May's 493 bitcoins to June's 360. Market commentators believe the fall was related to a normalization in transaction fees versus the prior month that could now act as a temporary windfall.
Despite record high temperatures, weak wind production, and record demand for power presenting operational challenges, Cipher found ways to leverage these circumstances.
Power Sales
Making the most of its power purchase agreement (PPA), Cipher sold power back to the grid during the high-demand period, which generated over $1 million in power sale revenue. This move was facilitated by the deployment of 11,000 recently acquired Canaan mining rigs, boosting Cipher's total deployed rig count to around 65,000. Cipher’s hash rate, grew by around 12% to 6.7 exahash per second (EH/s) from the previous month's 6.0 EH/s.
EH/s stands for exahashes per second, which is a unit of measurement used to quantify the computational power of a cryptocurrency mining network.
In other operational highlights, Cipher's current 'HODL' balance -- a term used by cryptocurrency investors to describe the act of holding onto assets regardless of market fluctuations -- grew to 417 bitcoins, up from 407 bitcoins in May.
The company sold 350 bitcoins in June to fund operating expenses across all sites and ongoing capital expenditures at its Odessa, Texas facility, which is currently in the final stages of construction. Cipher is targeting an impressive hash rate of 7.2 EH/s by the end of Q3, generating further production growth.
Short Squeeze Sirens
Fintel’s short squeeze quant analysis on the stock gives CIFR a score of 88.36 and ranks the stock at 70th on the US stock leaderboard currently screening 4,596 stocks.
CIFR currently has short interest of around 9.1 million shares currently shorted, according to FINRA, with 4.66 days to cover on average. This represents around 22% of the total float.
Options Traders Turn Bearish
When delving into sentiment in the options market for CIFR, we noticed a sharp swing from bullish to bearish sentiment which occurred from March through to June.
This is illustrated by a rising Put/Call ratio which the Fintel platform uses to assess the underlying options sentiment for a stock by tracking all disclosed put and call options demand in the market over time for a stock. CIFR currently has a Put/Call ratio of 1.58.
You can find a list of stocks with greater bullish sentiment in the leaderboard. The chart below shows how this ratio has behaved against the share price over the last year.
On the broader scale, the Bitcoin mining sector saw significant growth in June as Bitcoin prices fluctuated between $25,000 and $31,000. Despite an approximately 1% decline in network difficulty in June, the average daily network hashrate marked an increase for the sixth consecutive month, averaging a record 370 EH/s for the period.
However, U.S. miners might have to tread lightly in the coming months, as rising power prices in Texas could force them to dial back operations. Meanwhile, the sector's aggregate market cap surged by 23% to over $8 billion, underscoring the bullish trend across U.S.-listed miners.
Among the sector's standout performers was Riot Blockchain (US:RIOT), which announced a significant purchase agreement with MicroBT for 33,280 next-gen miners, marking a significant step in Riot's expansion at its Corsicana, Texas facility. RIOT is targeting 20 EH/s production by the middle of next year, expanding its dominance in the sector.
In other production news, CleanSpark (US:CLSK) saw its production decline by 6.3% over the month to 491 BTC with the company now HODL’ing a balance of 529 coins.
On the other hand, Marathon Digital (US:MARA) reported production of 979 coins in June, bringing its total for the quarter to 2,926 coins. The company blamed transaction fees for the weak results, in-line with broader market comments.
Terawulf (US:WULF) produced 347 coins in June, driving its share price up 45% in the last five days.
Stronghold Digital Mining (US:SDIG) produced 225 coins during June, rising even further with a 75% eyewatering rally this week.
Hive Blockchain (CA:HIVE) in Canada is currently producing at a rate of around 3.3 EH/s per month as reported in May but expects to reach a capacity of 6 EH/s by the year’s end with new infrastructure and assets.
Halving Ahead
While other miners ponder the potentially bearish implications of Bitcoin halvings -- events that slash miners' reward in half -- industry giants like Cipher and Riot are poised to secure larger market shares, possibly at the expense of higher-cost producers. This anticipated shift could catapult the industry into a new era following the April 2024 halving.
Despite the sector's optimism, the industry continues to grapple with an unforgiving survival game, as fluctuations in Bitcoin prices threaten miners' bottom lines. However, top-tier miners like Cipher, armed with low costs and conservative debt profiles, stand a better chance at not only surviving but thriving. These miners are strategically expanding their capacities, positioning themselves for explosive profit growth when Bitcoin prices exceed production costs.
As the Bitcoin mining sector charts a prosperous path, investors and industry players remain eager to see if the sector's rally will persist or face another crypto winter. Regardless, the resilience and adaptability of these digital gold miners in overcoming short-term challenges promise a compelling future for cryptocurrency mining.
This story originally appeared on Fintel.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
