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- Bitcoin’s first big pullback of the year is hurting cryptocurrency miners on Monday.
- Shares of Riot Blockchain and Marathon Patent Group have fallen over 15% on the back of Bitcoin’s pullback.
- Bitcoin mining is now more popular, and more difficult, than ever before according to data from CoinDesk.
- Visit Business Insider’s homepage for more stories.
Shares of Cryptocurrency miners Riot Blockchain and Marathon Patent Group are taking the brunt of bitcoin’s fall on Monday.
Both stocks are down over 15% following bitcoin’s tumble from over $40,000 to under $33,000 per coin. The slide wiped some $170 billion off of total cryptocurrency market value in just a few days.
As of Monday morning, the decline is the largest drop for cryptocurrencies since their historic run began back in October.
The bitcoin sell-off comes after months of gains for cryptocurrencies and may signal some profit-taking, according to Simons Chen, executive director of investment and trading at cryptocurrency financial services firm Babel Finance.
Chen said in a statement, “the correction we saw was expected as we believe the BTC price surge recently from under $20,000 to $40,000 in the past four weeks will induce sell pressure,” per CNBC.
However, according to the Bitcoin bulls, there's still room for the cryptocurrency to run.
"It's probably going to $100,000, then $150,000, then $200,000," Social Capital's Chamath Palihapitiya argued on CNBC's "Halftime Report last Friday.
Others, including economist David Rosenberg, argue Bitcoin is nothing more than a "massive bubble" that investors just don't understand.
Bubble or not, Bitcoin miners saw unprecedented gains in recent months.
Shares of Riot Blockchain went from trading at under $10 per share in early December to around $22 per share on Monday. And shares of Marathon Patent Group traded at under $5 per share in early December vs. over $21 per share as of Monday morning.
The rapid price appreciation among crypto miners came on the back of mining revenue tripling in recent months.
Unfortunately for public Bitcoin miners, the crypto gold rush also brought new competition to the industry, making mining for bitcoin more difficult, and data from Coindesk shows cryptocurrency mining is more popular and harder than ever before.
This has also put a strain on hardware suppliers in the industry, according to Edward Evenson, business development lead at Braiins, a mining software company.
"ASIC manufacturers have had to turn away more than half a billion dollars in mining equipment orders in Q4 2020 alone. Hardware supply chains are currently overloaded by immense demand," Evenson said.
The good news for Riot Blockchain and Marathon Patent Group shareholders is the companies have already placed pre-orders for 31,000 and 90,000 crypt mining machines, respectively, through 2020.
Still, if Bitcoin prices don't stabilize, these highly correlated stocks could continue their fall in 2021.