U.S. Mining Stocks Drop Almost 50% Despite Hashrate Increasing
19 Maggio 2022 - 11:00AM
NEWSBTC
The Cambridge Center for Alternative Finance, a financial research
institute affiliated with Cambridge University, has found that the
Bitcoin hashrate was up by 4% in August from the previous year,
from 35% to 39%. But, still, the mining stocks have seen declines
in the last month, with Bitcoin prices going down. The concluded
figure involves BTC.com, Via BTC, and Pooling data. Cryptocurrency
mining involves verifying and broadcasting the transactions on the
relative blockchain ledger. It is a computationally-intensive
process that opens doors for validators (who validate transactions)
to earn rewards. Validators verify the transaction by guessing a
unique hash number associated with each transaction. And it
requires computing power more than simple PCs. Related Reading |
New Data Shows China Still Controls 21% Of The Global Bitcoin
Mining Hashrate Similarly, it needs a more powerful computer when
verifying transactions on the Bitcoin network. Because the Bitcoin
algorithm creates difficulty when too many validators come online
simultaneously. Mining Bitcoin through a home computer was feasible
a decade ago. However, considering the problems that arose with the
growth of BTC mining, U.S. public companies such as Marathon
Digital Holdings, Riot Blockchain, and Core Scientific owned server
forms have made this type of work more accessible. Mining Stocks
Dropped Nearly 50% The most recent bloodbath in the crypto market,
which has seen the collapse of TerraUSD and the price dips of many
cryptocurrencies, also caused a slump in the price of the shares of
these mining companies. Since April 18, mining stocks of Core
Scientific and Marathon have nearly lost 47% of their value.
Likewise, Riot’s shares are reduced by its one-half, and
Canadian-based Hut 8 Mining Corp has similarly diminished by 41% of
the value of its shares. A few crypto traders point out that seeing
the last month’s decline of 25% in Bitcoin price and the increasing
correlation of crypto with the stock market, investors would now be
cautious about cryptocurrency investment. The level of correlation
between crypto and stocks has lasted between 0.67 to 0.78, with the
BTC falling 10% on the day of peak correlation. Here 0 refers to no
relationship, and 1 implies being completely correlated. Richard
Craib, chief of the San-Francisco-based hedge fund Numerai, stated
that digital assets are now “part of the mainstream financial
system, and that’s not good for its viability as an alternative
asset class. It’s not serving its original purpose as an
uncorrelated asset.” Related Reading | Bitcoin Bearish
Signal: Whales Ramp Up Dumping Analysts say that some traditional
investors have ended up their crypto trading. The plummet of tech
stocks has become the reason behind the exit of many investors. So
they are selling their virtual assets to raise funds. In
addition, the raised concerns about the environmental impacts of
mining could also play their role in dropping stock prices. As of
now, 160 crypto mining bills are waiting for the consideration of
the government authorities in over 30 states. Featured image from
Pixabay and chart from TradingView.com
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