• Bitcoin mining difficulty fell about 6% last week, the report said.

  • The broker noted that bitcoin miners with the lowest costs have increased market share since the halving.

  • Bernstein said a pause in the bitcoin rally is good for lower cost miners as hashrates remain capped.

Bitcoin {{BTC}} mining difficulty fell around 6% last week in the most significant decline since the crypto winter of December 2022, and this is a positive development for some of the miners, broker Bernstein said in a research report on Monday.

The broker noted that with lower bitcoin prices and an almost doubling of costs since the halving, higher cost mining equipment has shut down, resulting in a drop in hashrate.

“With the decrease in hashrate, market share of our 3 covered miners has gone up after halving by almost 20 basis points (bps),” analysts Gautam Chhugani and Mahika Sapra wrote, adding that “we expect the top 3 listed bitcoin miners to continue to consolidate market share via organic and M&A led expansion.”

Hashrate refers to the total combined computational power that is being used to mine and process transactions on a proof-of-work blockchain.

The leading bitcoin miners, Riot Platforms (RIOT) and CleanSpark (CLSK), have the lowest cost of production with strong balance sheets and cash positions, the report said.

“A temporary pause in bitcoin price is actually good for the incumbent lower cost bitcoin miners, as hashrates remain capped and strong miners can execute on their aggressive capex and M&A plans to grow market share,” the authors wrote.

“And finally, when bitcoin price momentum picks up, miners can harvest high dollar revenues over higher production,” the report added.

The broker doesn’t predict a major drawdown in the bitcoin price, expecting the cryptocurrency to remain range-bound and to break out to the upside once spot exchange-traded funds (ETFs) see allocations from registered investment advisors (RIAs), wealth platforms and other institutional funds.

Bernstein has an outperform rating on CleanSpark and Riot Platforms and a market-perform rating on Marathon Digital (MARA).

Read more: Bitcoin Miners Have Raked in Abnormal Transaction Fees Since Halving: Bernstein