Beleaguered bitcoin miners are finally feeling the spring sunshine after a cold, hard crypto winter.

The power-hungry companies that pump new bitcoin into circulation have been thrown a lifeline by the cryptocurrency’s rally to above $30,000 this year, which has conspired with falling electricity prices to boost their profitability.

The 30-day average of mining revenues has risen to $27.34 million a day, the highest level since last June, according to data from Blockchain.com.

That’s a relief for miners that struggled to service large debt burdens as revenues languished between $15 million and $21 million for most of the second half of 2022. They’re still some way off a peak of $61.2 million hit in November 2021, though.

“Many public miners were on the brink of bankruptcy at the end of last year. At the current bitcoin price, these companies’ cash flows have substantially improved and most of them should have no problem paying their obligations,” said Jaran Mellerud, analyst at bitcoin mining services company Luxor.

Miners’ debt-to-equity ratios now look much healthier, said Mellerud, adding that many companies had restructured and paid down debt over the past few months.

Marathon Digital Holdings’ debt-to-equity ratio has dropped to 0.5 from 2 since the start of this year, for example, while Greenidge Generation Holdings’ (GREE.O) has dropped to 5.8 from 11.7, according to data from Luxor.

The spring thaw has seen investors flock back to publicly traded crypto mining companies; Among the biggest players, Marathon (MARA.O) and Riot Platforms (RIOT.O) have seen their share price more than triple this year, while the Valkyrie Bitcoin Miners ETF (WGMI.O) is up 162% and Greenidge has gained 137%. But they’ve all still lost money since early 2022.

Bitcoin mining is the process by which a network of computers validates a block of transactions on the blockchain. Miners are rewarded with bitcoin for completing a block, competing against other miners by solving intricate maths puzzles with energy-intensive computing systems, meaning electricity comprises a significant chunk of their operating costs.

Declines in power prices, particularly in the U.S., have eased pressure on company margins, according to analysts at BTIG, who said the electricity cost for producing one bitcoin has fallen about 40% from the end of last year.

That means that despite both the computing power available on the network and mining difficulty rising steadily to new all time highs - meaning it should take more power to mine one block - the 30-day average cost-per-transaction for miners has fallen to its lowest level since September, Blockchain.com data showed.

OUT OF THE WOODS?

Miners can’t get too cozy though, given their fortunes are tied to bitcoin’s capricious price trajectory.

“If we see bitcoin top out and consolidate, the run-up in miners may do the same, we expect to see more volatility as we head into summer,” said Kevin Kelly, head of research at Delphi Digital, although he sees a favorable environment for crypto persisting through 2023, compared with last year.

Despite improvements in their balance sheets, many miners still have plenty of debt to pay down and are still struggling, said Luxor’s Mellerud.

“The bitcoin price increase has bought these companies time, but it would be detrimental for these companies if it were to fall back down to $20,000,” he said.

Most companies are focusing on debt reduction rather than spending on new equipment, BTIG said, even as the estimated cost of new mining rigs has dropped around 69% since the end of 2021.

There are some exceptions however, with CleanSpark (CLSK.O) taking advantage of falling prices to purchase of 45,000 new mining rigs, which would nearly double its computing power.

A rapid rise in power prices or a fast fall in bitcoin could usher in a new cold spell. For now though, the sun is shining.

“I don’t think we’re completely out of the woods, but I think the worst is behind us,” said Marcus Sotiriou, analyst at digital asset broker GlobalBlock (BLOK.V).