Bitcoin BTC/USD mining stocks just hit a rough patch

Bitcoin Price Drops, Mining Competition Rises. The culprit? A combination of Bitcoin's price decline and rising mining competition.

Bitcoin BTC/USD mining stocks just hit a rough patch. According to JPMorgan analyst Reginald L. Smith, U.S.-listed miners are now trading at just 1.35x their proportional share of the four-year block reward opportunity. This marks the first time in nearly a year that valuations have fallen below the 1.7x historical average.

Bitcoin's price fell 10% in March, averaging $85,600 and briefly touching $79,000. Meanwhile, network hashrate, a key measure of mining difficulty, rose 35% year-over-year to an average of 811 EH/s.

With more miners vying for a slice of the pie, daily mining profitability continues to erode.

According to the analyst's calculations, the 14 U.S.-listed miners that JPMorgan tracks saw a combined market cap fall by 13% from Feb. 28 to March 15. This marks a $3 billion hit.

Only one miner outperformed Bitcoin's price movement in that span. Cipher Mining Inc CIFR led the losers with a 25% drop, while Argo Blockchain PLC ARBK was the lone miner to post a gain, rising 1%.

The U.S.-listed miners also saw a slight increase in their market share, collectively adding about 1 EH/s of hashpower since late January to maintain their share of the global hashrate at around 30%.

Bitfarms Ltd BITF and CleanSpark Inc CLSK saw the biggest increases in self-mining capacity. On the other hand, Core Scientific Inc CORZ and Hut 8 Corp HUT saw slight decreases in their hashpower.

Now, the sector is facing a squeeze with declining Bitcoin prices and increased competition making mining a tougher business. With valuations slipping below long-term averages, the question remains: Are investors overreacting or is this a sign of tougher days ahead?

See More: Top Cryptocurrency News Today: Bitcoin Drops As March CPI Shows Stubborn Inflation, Now Averaging $85,600 This Month

This article was originally published on Benzinga and has been modified for Clear Investing.