Since the launch of spot Bitcoin ETFs back in January, the price of Bitcoin has recorded a massive surge in the last 50 days.
However, companies that mind the pioneer crypto token have not been as jubilant as those who invested in it, with only one exception.
The situation
Several public mining companies have seen their shares decline or trade flat so far in 2024. There has been a 6.2% decline in shares of Riot Platforms (RIOT).
Likewise, an 11% drop has been recorded by Iris Energy (IREN). Mining giants, such as Marathon Digital (MARA) and Bitfarms (BITF) have appreciated, but it is only by 17% and 5%, respectively.
Meanwhile, the price of Bitcoin has reached the $65,000 mark, not far off from its all-time high. Since its launch, there has been a 35% rise in BlackRock’s iShares Bitcoin Trust (IBIT).
This is an unusual contrast, considering the close relationship between the business model of miners and Bitcoin’s price.
Mining companies purchase expensive machinery and power to gather a consistent supply of new BTC tokens issued by the network.
As the mining industry gets payouts directly denominated in BTC, there is an increase in their dollar-based revenue in direct proportion to the price of the crypto token.
The halving
Currently, every Bitcoin block rewards miners with 6.25 BTC and it takes 10 minutes on average to produce a block.
With that said, Bitcoin’s halving is approaching in April and this would see the per-BTC reward decline permanently to 3.125 BTC per block.
Several analysts from companies like JPMorgan have stated that the halving could push less efficient and smaller miners out of business.
The last few days saw the miner category experience a pullback, but before that, mining stocks had been ahead of the Bitcoin price increase.
Therefore, the industry is now experiencing some stabilization, and mining stocks are returning to parity once more.
Other sources
Fortunately, there are some other sources of revenue available to miners and that has been a saving grace for CleanSpark (CLSK), a Bitcoin-friendly cloud computing company.
Last year, Bitcoin BRC-20 tokens gained a lot of popularity and this gave a boost to the transaction fee on Bitcoin.
It had provided miners with extra juicy payouts with each block. On a bigger scale, Bitcoin mining companies are also pushing into AI via high-performance cloud computing services.
According to executives, this is proving to be a lot more profitable than BTC mining. CleanSpark has proven to be the exception amongst Bitcoin miners this year.
It has managed to outperform them, given that its shares have recorded a 64% increase and almost doubled their value in the previous month.
In the past few months, CLSK managed to outperform Bitcoin by a whopping 603%. Experts have said that the opportunities for investors are different in bitcoin mining and bitcoin ETFs.
The choice depends on the risk appetite of investors. Miners who are ready for halving are expected to see rewards in terms of investor confidence.