- Crypto-mining revenues have jumped to a new all-time high of $78 million a day, according to Deutsche Bank.
- The increase has closely followed bitcoin's rally, with the crypto repeatedly setting fresh records.
- Miners are investing in new equipment ahead of bitcoin's halving event in April.
Bitcoin's record-breaking spree is spurring windfall profits for cryptocurrency miners, with industry revenues reaching all-time highs, Deutsche Bank said in a research note.
On Monday, daily mining revenue hit a new peak of $78 million a day, climbing in unison with the ongoing bitcoin rally. That same day, the token surged past a $72,000 record threshold, though analysts expect even higher price levels this year.
Driving the rebound is Wall Street's emerging embrace of the asset, with 11 spot bitcoin ETFs launched in mid-January. The success of these funds is spurring even more institutions to jump into the race, including Wells Fargo and Merrill.
Other tailwinds are yet to come, and include regulatory changes, loosening monetary policy, and the highly anticipated halving, Deutsche said.
The latter, a four-year event that reduces the amount of bitcoin awarded to successful miners, is pushing firms to acquire new capital. Since February 2023, 13 firms have invested $1 billion in specialized computers and equipment, meant to boost operations.
It's crucial that miners invest in such upgrades, as halving cycles often cut into profit-taking, leading to firm fallout and consolidation.
"The last halving took place in May 2020, reducing the miner reward from 12.5 to 6.25 bitcoins per block. Miners saw their profits significantly reduced overnight. Many were forced to shut down outdated rigs that became unprofitable to operate," Deutsche wrote.
The next halving is scheduled for April of this year, and will reduce awarded bitcoins to just 3.125. Fierce competition is already evident in rising bitcoin energy consumption, which rose to its highest since September 2022 in annualized terms, the bank said.
But for bitcoin investors, the halving cycle should enflame the price rally.
"In the 30 days prior to the November 2012 halving, prices rose by 5%. A more substantial 13% gain was seen ahead of the July 2016 event. Most recently, there was a sizable 27% price increase in the month before the May 2020 halving," it wrote.
The token's higher prices could actually mean that miners have to sell less of acquired bitcoin to achieve the same profitability, Standard Chartered analyst Geoff Kendrick pointed out last year. This means that firms could sell even less of the asset, diminishing supply and causing bitcoin to surge even higher.
In his latest forecast, he expects bitcoin to rise to $100,000 before 2024's end, boosted by inflows to the ETFs.