Bitcoin miner earnings hit all-time highs last week as the price for the largest cryptocurrency continues to trade around record levels.
Daily miner revenue reached $78.6 million on March 7, data from CryptoQuant showed, surpassing the peak set in April 2021 during the last crypto bull market.
Bitcoin miners earn money in the form of new coins awarded to them for validating and adding transactions to the blockchain network, as well as from fees paid to them by users.
The spike in miner revenues comes amid a 70 per cent rally for Bitcoin so far this year. The token set a record high of almost $72,881 on Monday and changed hands at $72,668, as of 11.31am in Singapore on Tuesday.
After a prolonged slump tied to a string of crypto scandals and bankruptcies in 2022, the price of Bitcoin began rallying last year and received a further boost from a net inflow of approximately $9.5 billion into a crop of US spot Bitcoin exchange-traded funds that debuted on January 11.
Bitcoin’s upcoming halving in April, which will cut miner rewards in half and decrease the coin’s supply growth, has also encouraged wagers on rising prices.
For miners, the backdrop is a marked turnaround from the depths of the crypto winter, when some succumbed to bankruptcy.
For instance, the Valkyrie Bitcoin Miners ETF – which includes companies such as CleanSpark and Marathon Digital Holdings – has more than doubled over the past 12 months.
Firms are rushing to position themselves for success. Since February 2023, 13 of the top mining companies have placed orders for over $1 billion worth of specialised computers, Bloomberg earlier reported.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
