Bitcoin Mining Has Changed — It’s No Longer Just About the Price
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In today’s issue, Ben Harper from Luxor Technology provides an update on what’s happening with bitcoin mining this year. Then, Colin Harper from Blockspace Media answers questions on the topic of mining and AI in Ask and Expert. – Sarah Morton You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks digital assets for financial advisors. Subscribe here to get it every Thursday. Bitcoin Mining Has Changed — It’s No Longer Just About the Price The bitcoin mining investment thesis used to be simple — miners thrived when bitcoin’s price soared, and when it fell, they suffered. But in 2024, that equation changed. Bitcoin ETFs, hashrate markets and AI have fundamentally reshaped the industry, reducing miners’ dependence on bitcoin’s price. Here’s why mining is no longer just a bet on bitcoin, and what this means for investors.2024: The Year Bitcoin Mining Diverged From Bitcoin’s Price In 2023, Bitcoin mining stocks behaved like a high-beta proxy for Bitcoin, amplifying its moves — soaring higher when bitcoin rallied and crashing harder when it fell. But in 2024, this pattern broke down. Despite bitcoin reaching new all-time highs, mining stocks failed to reclaim their previous peaks. The table below illustrates the shifting correlation between Hashrate Index’s Crypto Mining Index and bitcoin’s price, comparing weekly prices and returns before and during 2024: Source: Hashrate Index, June 2020 – December 2024 The takeaway is clear: Bitcoin mining stocks are no longer just a straightforward bet on bitcoin’s price. This divergence stems from four key trends shaping the sector: 1. Institutional Bitcoin Adoption: The Advent of Spot ETFs The launch of spot bitcoin ETFs in January 2024 reshaped institutional investment in bitcoin. With ETFs amassing over 1.3 million BTC and surpassing $100 billion in assets under management, the appeal of mining stocks as a bitcoin proxy…
Filed under: News - @ February 6, 2025 8:20 pm