After the Bitcoin halving event in April, major Bitcoin miners have been adopting one of two strategies: either holding onto the BTC they mine or investing in artificial intelligence (AI). The BTC halving reduces miners’ earnings by half every four years, which is a deflationary mechanism that helps maintain the hard cap of 21 million Bitcoin.
Public miners like MARA Holdings, Riot Platforms, and CleanSpark are choosing to hold onto the BTC they mine, hoping that its value will increase over time. According to Wolfie Zhao, an analyst at research firm TheMinerMag, by avoiding selling Bitcoin immediately at a loss, miners can keep potential losses unrealized and position themselves for gains if a bull market emerges.
On the other hand, the strategy favored by crypto mining stock traders is investing in AI. For example, the stock of Core Scientific has nearly quadrupled since it announced multi-billion-dollar contracts with AI startup CoreWeave. Core Scientific successfully restructured after emerging from bankruptcy earlier this year.
In contrast, the stocks of MARA and Riot, who are betting on holding BTC, have dropped by 20% and 36% respectively this year. Conversely, shares of Iris Energy and Bit Digital, which have been investing in AI, have performed better than those holding BTC.
The strategy of holding BTC appears feasible for profitable miners like MARA and Clean Spark, especially in a market with rising Bitcoin prices.
With the market on the rise, Bitcoin miners have started borrowing and issuing more shares again. Companies like MARA are using the funds to buy more crypto, following the example of MicroStrategy.
However, Ethan Vera, the chief operating officer at Luxor Technology, a Bitcoin mining software and services firm, issued a warning. He stated that in an environment of rising Bitcoin prices, the strategy would be extremely successful, but it would be disastrous if Bitcoin prices were to plummet. Vera believes that negative profits would continue, and miners would hide the true state of the industry by diluting shareholders and purchasing new machines.
In conclusion, while some miners choose to hold onto the BTC they mine, others are investing in AI. Holding BTC can be a profitable strategy for miners in a rising market, but it comes with risks if Bitcoin prices decline.
Note: This translation has been done to the best of my ability, but some details may be lost or altered in the translation process.