Bitcoin miners are ramping up their operations at an unprecedented rate, driven by the recent surge in cryptocurrency prices and the looming prospect of a significant update to Bitcoin’s code. This surge in activity comes after a tumultuous period for the crypto industry, with miners now investing billions of dollars in equipment and consuming energy at record levels.

Mining Expansion Amid Crypto Surge

Following a recovery from the challenges of the crypto winter, Bitcoin miners are once again in growth mode. Fueled by the recent surge in Bitcoin prices and the anticipation of the upcoming halving event, mining companies are aggressively expanding their operations. Since February 2023, top mining companies have collectively ordered over $1 billion worth of specialized computers, aiming to enhance efficiency and secure favorable electricity rates.

The rapid expansion of mining operations has led to a surge in energy consumption. Last month alone, miners drew a record 19.6 gigawatts of power, a substantial increase from the previous year. This level of energy consumption is equivalent to powering approximately 3.8 million homes in Texas, where many mining operations are based.

Impact on the Bitcoin Market

The rise in Bitcoin prices has enabled miners to remain profitable, with some mining companies experiencing exponential growth in their stock values. Shares of leading miners such as Marathon and CleanSpark have soared by almost 600% and 900%, respectively, since December 2022. Additionally, these companies have raised substantial capital through share offerings, further fueling their expansion efforts.

However, the upcoming halving event poses challenges for miners, as it will significantly reduce their revenue streams by limiting the supply of Bitcoin. This reduction in rewards could push some miners into negative margins, leading to potential consolidation within the industry.

Risks of Rapid Expansion

The rapid expansion of mining operations also comes with risks, as seen during the previous crypto bull run. Many mining companies went public and raised substantial funds, only to face bankruptcy when the market crashed in 2022. The danger of compromising on energy costs and operational efficiency looms large, highlighting the need for prudent expansion strategies.

As Bitcoin miners gear up for the halving event and navigate the challenges of rapid expansion, the crypto industry is experiencing unprecedented growth. However, with soaring energy consumption and potential risks on the horizon, the sustainability of this growth remains a key concern for stakeholders.

In a bullish forecast for Bitcoin (BTC) investors, Markus Thielen, head of research at 10x, anticipates that the cryptocurrency will hit an all-time high before the week concludes. Thielen’s insights come amidst a backdrop of significant market movements and increasing institutional adoption.

Thielen emphasized the importance of weekend price action, noting that despite attempts to liquidate leveraged long positions, the absence of sellers is a notable factor driving Bitcoin’s upward trajectory. The cryptocurrency surged to an all-time high against the euro on Monday and, at press time, was trading just above $67,000, a 6% increase over the past 24 hours.

Bitcoin Market Momentum and Institutional Adoption

Thielen pointed out several bullish indicators, including a substantial decline of 63,000 bitcoins held on exchanges over the past month. Notably, Coinbase‘s balance dropped from 400,000 to 372,000 bitcoins in just one month, indicating a trend of decreased supply available for trading.

Additionally, Thielen highlighted BlackRock‘s recent launch of a spot ETF in Brazil, underscoring the growing global interest in cryptocurrency investment products. Volumes in Korea have also surged to $8 billion per day for five consecutive days, signifying a significant uptick in trading activity compared to previous levels.

Institutional Flows and Market Dynamics

The analyst discussed the flow of funds between major investment products, noting spikes in outflows from Grayscale’s GBTC product and inflows into BlackRock’s IBIT. Thielen expects movement into the BlackRock product to resume strongly this week, as investors gain confidence amidst Bitcoin’s upward price momentum.

Thielen speculated that if Grayscale‘s outflows drop to less than $100 million, Bitcoin could experience a substantial upward movement in price, further fueling investor optimism.

With growing institutional interest, declining exchange holdings, and optimistic market sentiment, Bitcoin appears poised for a significant price surge. Investors eagerly await the unfolding price action, anticipating the cryptocurrency’s ascent to new heights in the coming days.

In a notable development within the cryptocurrency investment landscape, BlackRock’s IBIT spot Bitcoin ETF has crossed the $10 billion mark in total assets under management (AUM). The achievement underscores the continued dominance of BlackRock’s offering in the market, fueled by significant daily inflows and Bitcoin’s robust upward momentum.

Key Milestone Amid Market Rally

BlackRock’s IBIT Bitcoin ETF witnessed its second-largest daily inflows since its trading commencement on January 11. This milestone coincides with Bitcoin’s remarkable bullish run, marking its most substantial monthly rally since December 2020. With Bitcoin exchanging hands at $62,494 and recording a 22.67% gain over the last seven days, investor interest in cryptocurrency-backed ETFs has surged.

Impressive Performance

Per data from BitMEX Research, BlackRock’s IBIT spot Bitcoin ETF accumulated 162,697.9 Bitcoins, equivalent to over $10 billion in AUM, following a daily inflow of $603.9 million. This places BlackRock’s fund ahead of competitors such as Fidelity’s FBTC spot Bitcoin ETF and Ark Invest 21 Shares’ ARKB, which currently manage $6.4 billion and $2.1 billion in AUM, respectively.

Market Dynamics

According to Nate Geraci, President of The ETF Store, BlackRock’s achievement is noteworthy considering that only a fraction of exchange-traded funds possess over $10 billion in AUM, with the majority established over a decade ago. The emergence of nine newly launched spot Bitcoin ETFs, collectively holding over 344,000 BTC in AUM, further reflects the growing interest in cryptocurrency investment vehicles.

Inflows and Outflows

While BlackRock’s ETF experienced significant inflows, Grayscale’s converted GBTC fund encountered notable outflows, amounting to $598.9 million, the second-largest to date. Despite this, the net inflows of all U.S.-based spot Bitcoin ETFs totaled $92.4 million as of Thursday, though showing a decrease from Wednesday’s figure of $673.4 million.

Following the approval of U.S.-based spot bitcoin (BTC) exchange-traded funds (ETFs) in January, the cryptocurrency market is witnessing a significant impact on both prices and order book liquidity.

Notable Increase in Market Depth

BTC: Aggregated 2% market depth (Kaiko) (Kaiko)

Recent data from Paris-based Kaiko reveals that Bitcoin’s order book liquidity has reached its highest levels since October. The combined value of buy and sell orders within 2% of the market price surged to $539 million on Tuesday, marking a 30% increase since the introduction of spot ETFs on January 11.

Liquidity and Slippage Dynamics

Market depth, reflecting the combined value of buy and sell orders within 2% of the market price, is a crucial indicator of liquidity. The surge in market depth enhances the ease of trading large quantities at stable prices, thereby reducing slippage – the difference between quoted and executed trade prices.

The share of U.S. exchanges has improved sharply since October. (Kaiko) (Kaiko)

U.S.-Based Exchanges Lead the Way

Kaiko‘s data highlights that U.S.-based exchanges have played a pivotal role in the global bitcoin market’s increased depth. The share of U.S.-based exchanges in the global 2% market depth has surged from 14.3% to 48%, underscoring the impact of spot ETF expectations since October.

While the surge in market depth is promising, it still falls short of pre-collapse levels witnessed in November 2022. Before the collapse of FTX and Alameda Research, market depth exceeded $800 million, indicating potential for further growth and stabilization in the bitcoin market.