Diverging Strategies Among Bitcoin Miners After Halving: HODL or AI Investments?
In the aftermath of the Bitcoin halving event that occurred in April, prominent players in the cryptocurrency mining sector are opting for two distinct strategies: either retaining the Bitcoin (BTC) they mine or delving into artificial intelligence (AI) technologies. The halving event effectively reduces miners’ earnings by half every four years and plays a pivotal role in shaping these strategic decisions, reinforcing the finite cap of 21 million BTC.
Big names in the industry such as Marathon Digital Holdings (MARA), Riot Platforms, and CleanSpark have opted to hodl the BTC they mine, foreseeing potential value appreciation over time. Wolfie Zhao, a researcher at TheMinerMag, emphasized the logic behind this approach, stating, “By refraining from selling Bitcoin immediately at a loss, miners can retain unrealized losses and position themselves for potential gains in case of a bullish market.”
Conversely, the trend of investing in AI is gaining momentum among traders of crypto mining stocks. For instance, Core Scientific witnessed a nearly fourfold surge in its stock price following the revelation of multi-billion-dollar contracts with AI company CoreWeave. This surge followed Core Scientific’s successful emergence from bankruptcy through restructuring earlier this year. In contrast, Marathon and Riot, which lean towards holding mined Bitcoin, have seen their stock prices decline by around 20% and 36%, respectively, this year. On the other hand, companies like Iris Energy and Bit Digital, focusing on AI ventures, have displayed stronger market performance.
For miners like MARA and CleanSpark, choosing to hold BTC seems to be a prudent move as their operations remain profitable. This strategy gains more traction when Bitcoin prices are on an upward trajectory. Notably, Bitcoin miners are also resorting to borrowing and issuing more shares to finance additional crypto acquisitions, mirroring strategies previously employed by MicroStrategy.
Nonetheless, words of caution come from industry experts such as Ethan Vera, COO of Luxor Technology, a Bitcoin mining software and services provider. Vera highlighted a significant risk, noting, “In a scenario of escalating Bitcoin prices, this strategy will prove extremely successful, but it could lead to a disaster if Bitcoin prices plummet… Negative profits will persist, concealing the true state of the industry and operational difficulties by diluting shareholders and acquiring newer machines.”
To sum up, as Bitcoin miners navigate the landscape post-halving, their strategic choices—whether holding mined Bitcoin or turning towards AI—reflect varying levels of optimism and prudence amid volatile market conditions. These divergent approaches underscore the ongoing conflict between immediate sales pressures and long-term strategic positioning, underscoring the importance for investors to closely monitor industry developments and market trends.
