The launch of the Bitcoin ETF in January has sent the price of BTC skyrocketing over the past 50 days, but companies mining the top cryptocurrency are not as excited as those investing in it. There is one notable exception.
Shares of several public mining companies are flat or falling so far in 2024. Riot Platform (RIOT) fell 6.2%, and Iris Energy (IREN) fell 11%. Mining giants like Bitfarms (BITF) and Marathon Digital (MARA) were highly valued, but only accounted for 5% and 17%, respectively.
Meanwhile, the BTC price is up 42% year to date, while BlackRock’s iShares Bitcoin Trust (IBIT) is up 35% since launch.
This contrast is unusual given the close relationship between the price of Bitcoin and the business models of miners. Mining companies purchase expensive machinery and power to ensure a constant supply of new BTC minted on the network.
Since the mining industry largely receives payments directly denominated in BTC, dollar-based profits naturally increase in direct proportion to the price of Bitcoin. Currently, miners earn 6.25 BTC for each Bitcoin block created every 10 minutes on average.
This means that with Bitcoin halving approaching in April, the reward per BTC will be permanently reduced to 3.125 BTC per block. Several analysts at companies like JPMorgan agree that the halving could put smaller, less efficient miners out of business.
“There has been a healthy decline in the miner category over the past few days,” said Isaac Holyoak, Chief Communications Officer at CleanSpark. decryption. “But before that, mining stocks led the recent Bitcoin price increase. Almost all miners were well ahead of Bitcoin.”
“We are seeing some stabilization across the industry as Bitcoin and mining stocks return to parity,” he said.
But miners have other revenue streams, and this has benefited Bitcoin-friendly cloud computing company CleanSpark (CLSK).
The popularization of the Bitcoin BRC-20 token last year helped increase Bitcoin transaction fees, allowing miners to receive more rewards for each block. On a larger scale, Bitcoin mining companies are jumping into AI by supporting emerging technologies with high-performance cloud computing services. Management says: It is much more profitable per unit of energy than BTC mining.
CleanSpark stands out among public Bitcoin miners outperforming BTC this year. The stock price has risen 64% since the beginning of the year, more than doubling its value last month.
Over the past 12 months, CLSK has outperformed BTC by a massive 603%.
Holyoak argued that Bitcoin ETFs and mining companies offer a variety of opportunities to investors depending on their risk appetite.
“Miners who prepare for the halving will continue to be rewarded with investor confidence,” he concluded.
