JPMorgan’s latest Bitcoin Mining Monthly report reveals certain challenges for the cryptocurrency mining sector, raising concerns for Bitcoin mining ETFs.
February saw Bitcoin’s price drop 5% to an average of $95,300, with a further decline to $89,700 by month-end. This marks a 13% decrease from January.
This downturn had a direct impact on mining companies, with the total market cap of 14 U.S.-listed miners plunging 22%, erasing $6 billion in value. As these stocks tumbled, ETFs heavily weighted in Bitcoin miners, such as Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI), Bitwise Crypto Industry Innovators ETF (NYSE:BITQ), and Global X Blockchain & Bitcoin Strategy ETF (NASDAQ:BITS), likely faced significant drawdowns.
WGMI lost more than 20% last month whereas BITQ lost around 17% during the same period. Meanwhile, thanks to a significant allocation in short-term Treasury Bills, BITS has managed to mitigate its monthly dip to about 2%.
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Mining Profitability Erosion And ETF Risks
Beyond price declines, …
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