After the halving, Bitcoin miners are choosing between holding on to BTC or upgrading to AI.
After the Bitcoin halving occurred last April, major Bitcoin miners began choosing one of two strategies: holding on to the BTC they mined or leveraging artificial intelligence (AI). BTC halvings halve miners’ profits every four years. This is also a deflation mechanism that helps maintain the hard cap of 21 million Bitcoin.
Public miners like MARA Holdings, Riot Platforms, and CleanSpark are holding on to the BTC they mine in the hope that its value will increase over time.
Wolfie Zhao, an analyst at research firm TheMinerMag, told Bloomberg:
“By avoiding the immediate sale of Bitcoin at a loss, they (miners) can keep potential losses unrealized and profit if a bull market materializes.”
However, a popular strategy among cryptocurrency mining stock traders is investing in AI. For example, Core Scientific’s stock price nearly quadrupled after the company announced a multibillion-dollar deal with AI startup CoreWeave. Core Scientific emerged from bankruptcy earlier this year following a successful restructuring.
At the same time, the stock prices of MARA and Riot, which are betting on BTC holdings, have fallen 20% and 36%, respectively, this year. Likewise, the stock prices of Iris Energy and Bit Digital, which have invested in AI, performed better than stocks holding BTC.
With miners like MARA and Clean Spark operating profitably, a BTC holding strategy seems feasible. Moreover, in markets where the price of Bitcoin is rising, this strategy appears to be good.
In fact, as the market rose, Bitcoin miners began borrowing and issuing more shares again. And others like MARA are following in MicroStrategy’s footsteps and using their funds to buy more cryptocurrencies.
However, Ethan Vera, chief operating officer of Luxor Technology, a Bitcoin mining software and services company, sounded a warning. He said:
“In an environment where Bitcoin prices are rising, this would be a very successful strategy, but if Bitcoin prices plummet, it would be disastrous… You will continue to see negative profits and they are hiding how bad the industry is now and what will happen next. What makes their operations bad is diluting shareholders and buying new machinery.”