Bitcoin Miners Are Struggling After ETF Launch—Except One

The Bitcoin ETF launch in January has sent the price of BTC flying over the past 50 days, but companies that mine the top cryptocurrency have not been nearly as jubilant as the people who invest in it. With one notable exception.

Shares in several public mining firms are trading flat or down in 2024 so far. Riot Platforms (RIOT) has fallen 6.2%, and Iris Energy (IREN) has sunk 11%. While mining giants like Bitfarms (BITF) and Marathon Digital (MARA) have appreciated, it’s only by a modest 5% and 17% respectively.

Meanwhile, the price of BTC is up 42% year-to-date, with BlackRock’s iShares Bitcoin Trust (IBIT) up 35% since the moment it launched.

The contrast is unusual given the close relationship between Bitcoin’s price and miners’ business model. Mining firms buy expensive machinery and power to gather a consistent supply of new BTC issued by the network.

Since the mining industry at large receives direct BTC-denominated payouts, their dollar-based revenue naturally rises in direct proportion to Bitcoin’s price. Right now, miners earn 6.25 BTC with each Bitcoin block, which is produced every 10 minutes on average.

That said, with the Bitcoin halving coming up in April, the per-BTC reward is set to permanently fall to 3.125 BTC per block. Several analysts from firms like JPMorgan and others agree that the halving could push smaller, less efficient miners out of business.

“There has been a healthy pullback in the miner category over the last few days,” Isaac Holyoak, Chief Communications Officer of CleanSpark, told Decrypt. “But prior to that, mining stocks really front ran the recent Bitcoin price increase—almost all miners were well ahead of Bitcoin.”

“We are seeing a bit of a stabilization across the industry as Bitcoin and mining stocks return to parity,” he said.

Miners do have other sources of revenue, however—and that’s been a saving grace for Bitcoin-friendly cloud computing firm CleanSpark (CLSK).

The popularization of Bitcoin BRC-20 tokens last year helped boost transaction fees on Bitcoin, giving miners extra juicy payouts with each block. On a larger scale, Bitcoin mining firms are also breaking into AI by supporting the emerging tech with high-performance cloud computing services. This, executives say. is much more profitable per unit of energy than BTC mining.

CleanSpark stands out among public Bitcoin miners for outperforming BTC this year. Its shares are up 64% year-to-date, more than doubling in value last month.

Over the past 12 months, CLSK has greatly outperformed BTC, up 603%.

Holyoak argued that Bitcoin ETFs and mining firms present different opportunities to investors depending on their risk appetite.

“Miners that are prepared for halving will likely continue to be rewarded with investor confidence,” he concluded.

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