Bitcoin Mining Woes Drag Bitfarms Stock To 1-Year Low Amid Crypto Rout: Retail Sentiment Splinters

Bitfarms Ltd. (BITF) stock dropped more than 5% in mid-day trading Monday as Bitcoin mining difficulty rose and a sharp decline in Bitcoin's price weighed on the cryptocurrency mining sector.

The stock hit a more than one-year low of $1.47 during Monday’s session, a level last seen in December 2023.

Bitcoin (BTC.X) hit its lowest levels since November, trading at $89,260 after strong U.S. jobs data led major investment banks to scale back expectations for Federal Reserve rate cuts. 

The cryptocurrency also breached a key support zone near $92,000, which had held firm since late November.

Adding to miners' challenges, Bitcoin mining difficulty rose 0.61% on Sunday, to a record high of 110.45 trillion at block height 878,976. 

The increased difficulty requires higher computational power, raising operational costs for miners already grappling with the aftermath of April’s Bitcoin halving event, which led to a 50% drop in mining rewards.

Since the halving, total Bitcoin mining revenue has remained below the 365-day simple moving average (SMA) of $40 million. Analysts note that surpassing this threshold has historically coincided with Bitcoin bull runs, but revenues have yet to recover.

On Stocktwits, retail sentiment climbed to ‘neutral’ from ‘bearish’ a day ago, as chatter also increased to ‘normal’ from ‘low’ levels. 

One user speculated that Bitfarms might need to execute a reverse stock split to maintain its Nasdaq listing if its stock continues to follow Bitcoin’s downward trend. 

Another questioned the leadership of CEO Ben Gagnon, citing his relative inexperience at age 30. 

Comparisons with peer Riot Platforms (RIOT) highlighting Bitfarms’ underperformance also surfaced.

However, others believe that the stock is grossly undervalued and investors should invest in ‘buying the dip.’

Unlike Bitcoin, which has more than doubled in value over the past year, BItfarms’ stock has fallen nearly 30% during the same period.

The increasing difficulty and operational costs pose significant hurdles for Bitcoin miners, with profitability increasingly tied to Bitcoin’s volatile price trajectory.

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