Bitcoin mining stocks reportedly experienced a sharp decline in mid-August as the network hash rate increased, leading to decreased profitability.

A recent 2024 crime report by Chainalysis reveals that while overall illicit blockchain activity has dropped by nearly 20% year-to-date, specific crimes, particularly stolen funds and ransomware, have significantly increased.

According to recent data, BlackRock's exchange-traded funds (ETFs) focused on digital assets have now surpassed Grayscale Investments' offerings in total assets under management (AUM).

Top stories in the Crypto Roundup today:

• Bitcoin Mining Stocks Plunge as Network Hashrate Surges, Squeezing Profit Margins
• Chainalysis: Illicit Crypto Activity Drops 20%, but Stolen Funds and Ransomware Surge
• BlackRock's Digital Asset ETFs Surpass Grayscale's in Total AUM: Arkham

Bitcoin Mining Stocks Plunge as Network Hashrate Surges, Squeezing Profit Margins

Bitcoin mining stocks reportedly experienced a sharp decline in mid-August as the network hash rate increased, leading to decreased profitability. A research report from JPMorgan released last Friday revealed that the combined market capitalization of 14 U.S.-listed Bitcoin miners tracked by the bank fell by 18% since the end of July. 

The hash rate, which measures the total computational power Bitcoin miners use to process transactions and secure the network, rose by five exahashes per second (EH/s) to an average of 621 EH/s in the first two weeks of August. While this marks a 1% increase, it remains 30 EH/s below levels seen before the recent Bitcoin halving.

Despite the profitability challenges, U.S.-listed miners have increased their share of the global Bitcoin network hash rate for the fourth consecutive month, reaching a record 26%. However, mining profitability, measured by the hash price, remains 30% below December 2022 levels and 40% below pre-halving levels. This continued pressure on profitability may slow the growth of the network hash rate in the near term.

Bitcoin's price has declined by 8.3% since the last Bitcoin halving (April 19th) but is still up 39.4% year-to-date and 124.5% year-on-year. Marathon Digital Holdings, Inc. (NASDAQ: MARA), one of the largest Bitcoin mining firms, announced on 14 August that it had secured $300 million through an oversubscribed offering of convertible senior notes. Marathon used the proceeds to purchase 4,144 BTC, valued at approximately $249 million, increasing its strategic Bitcoin reserve to over 25,000 BTC.

Chainalysis: Illicit Crypto Activity Drops 20%, but Stolen Funds and Ransomware Surge

A recent 2024 crime report by Chainalysis reveals that while overall illicit blockchain activity has dropped by nearly 20% year-to-date, specific crimes, particularly stolen funds and ransomware, have significantly increased.

One concerning trend is the sharp rise in stolen funds. Inflows from stolen cryptocurrency have nearly doubled, increasing from $857 million to $1.58 billion in 2024. The average amount stolen per incident has risen by almost 80%, largely driven by Bitcoin’s rising value, which now constitutes 40% of the transaction volume linked to these thefts. 

Crypto thieves are increasingly targeting centralized exchanges over decentralized finance (DeFi) protocols, marking a shift back to traditional cryptocurrency theft methods. Additionally, advanced cybercriminals, including those linked to North Korea, are using off-chain techniques like social engineering to infiltrate crypto services.

Ransomware activity has also surged, making 2024 potentially the most profitable year on record for such attacks. Ransomware inflows have risen slightly by 2%, from $449.1 million to $459.8 million. This increase is driven by a strategic shift among ransomware operators toward fewer, high-value attacks, known as "big game hunting." The year has witnessed the largest ransomware payment ever recorded, with $75 million paid to the Dark Angels ransomware group.

BlackRock's Digital Asset ETFs Surpass Grayscale's in Total AUM: Arkham

BlackRock, the world's largest asset manager, has reached a significant milestone in the digital asset space. According to recent data, BlackRock's exchange-traded funds (ETFs) focused on digital assets have now surpassed Grayscale Investments' offerings in total assets under management (AUM). 

Currently, BlackRock offers two digital asset funds: IBIT, a spot Bitcoin ETF, and ETHA, a spot Ethereum ETF. The combined AUM for these two funds has reached $21.6 billion, edging out Grayscale's total AUM of $21.3 billion across its four funds: GBTC, BTC Mini, ETHE, and ETH Mini. This information comes from blockchain intelligence firm Arkham, which tracks the AUM of these prominent ETFs.

The shift in market leadership can be partially attributed to recent moves by major financial institutions. Morgan Stanley, for instance, disclosed that it has nearly liquidated its $269.9 million position in Grayscale's GBTC and now holds 5.5 million shares of BlackRock's IBIT, valued at approximately $187.1 million at current prices. Similarly, Goldman Sachs reported last week that it holds nearly 7 million shares of IBIT, worth about $235 million, although it still maintains smaller positions in Grayscale's converted funds and other spot Bitcoin ETFs.

Nate Geraci, president of The ETF Store, highlighted on social media platform X that IBIT has experienced only one day of net outflows since its launch, supported by data from SoSoValue. However, the ETF has also seen 26 days of zero net inflows or outflows.

While BlackRock's IBIT maintains a lead over Grayscale's Bitcoin ETFs, its spot Ethereum offering, ETHA, ranks as the third-largest fund by AUM. Since its launch on July 22, ETHA has not recorded any negative outflows, though it has had four days of net-zero trading.

State of the Crypto by Top Tier Exchange Volume

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