In today’s issue, Ben Harper of Luxor Technology provides an update on what is happening with Bitcoin Mining this year.
Then, Colin Harper of BlockSpace Media answers questions on the subject of mining and AI in Ask and Expert.
– Sarah Morton
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The Bitcoin intermediary has changed – it is no longer just the price
The Bitcoin extraction investment thesis was once simple – the minors prospered when the Bitcoin price has skyrocketed, and when it fell, they suffered. But in 2024, this equation changed. The FNB Bitcoin, the hash markets and AI have fundamentally redesigned the industry, reducing the dependence of minors at the price of Bitcoin. Here is why mining is no longer just a bet on Bitcoin, and what it means for investors.
2024: The year Bitcoin Mining diverged from the Bitcoin Prize
In 2023, bitcoin extraction stocks behaved like a high beta proxy for bitcoin, amplifying its movements – arrow higher when bitcoin rallied and crashed stronger when it fell . But in 2024, this model broke. Although Bitcoin reaches new heights of all time, mining actions have failed to recover their previous peaks.
The table below illustrates the changing correlation between the cryptographic mining of the hashrate index and the price of Bitcoin, by comparing prices and weekly yields before and in 2024:
Source: Hashrate Index, June 2020 – December 2024
The point to remember is clear: Bitcoin extraction actions are no longer simply a simple bet on the Bitcoin price. This divergence comes from four key trends by shaping the sector:
1. Institutional adoption of Bitcoin: the advent of ETF Spot
The launch of Spot Bitcoin ETF in January 2024 reshaped institutional investments in Bitcoin. ETFs amassing more than 1.3 million BTCs and exceeding $ 100 billion in assets under management, the attraction of mining actions as a Bitcoin proxy is. Instead of using minors as an indirect exposure, the capital took place directly in Bitcoin via ETFFundamentally changing market dynamics.
2. Half reduction and its consequences: pressure on the economy of minors
The fourth by half of Bitcoin in April 2024 reduced the block subsidy by 6.25 BTC to 3.125 BTC per block, half the primary income source of minors. Historically, the overvoltages in post-recompress Bitcoin prices have contributed to compensating for lower awards, but this time, minors were faced with opposite winds:
- Record network difficulty. The increase in competition has reduced the individual awards of minors.
- Fall transaction fees. A lower demand for block space has decreased a crucial secondary source of income.
- Hash punishment. Despite the Bitcoin rally, hashprice, an all-in mining income measure per unit of calculation (i.e. hashrate), dropped by 75%.
While the price of Bitcoin climbed 120% throughout the year, minors had trouble maintaining profitability, leading to consolidation and strategic pivots of the industry.
Source: Hashrate index
3. The rise of Hashrate derivatives: a change of play for minors
One of the most important financial developments in Bitcoin operations in 2024 was the rapid expansion of the Hashrate derivative market. This emerging market allowed minors to cover future sources of income and reduce exposure to the volatility of Bitcoin prices, fundamentally changing the way they manage the risks.
Traditionally, the mining income was at the mercy of the daily oscillations of Bitcoin, which makes it difficult for operators to provide cash flows or guarantee funding. However, with the increase in the markets of Hashrate Forward, minors could sell the future production of hashrate at a fixed price, locking income for months in advance. This financial instrument operates in a similar way to term contracts on basic products in the energy sector, where electricity producers pre-sellers electricity contracts to stabilize income.
In 2024, these formerly emerging markets experienced explosive growth. Over -the -counter volumes (OTC) jumped more than 500% in annual sliding on the Hashrate Forward market in Luxor, with contract periods extending up to 12 months. Meanwhile, the regulated exchange trading took a major step with the launch of Bitnomial Hashrate Futures, which makes it the first regulated exchange to offer a product derived from Bitcoin extraction.
The maturation of the markets of Hashrate Forward reports a new era in mining finances – one where minors have greater control over their sources of income, better access to capital and an improvement in resilience against the volatility of bitcoin prices.
4. Bitcoin mining meets AI and HPC: a convergence of industries
With pressure mining benefits, Many companies rotate AI and high performance IT (HPC) to diversify income. The Bitcoin extraction infrastructure Shares key similarities with AI data centers – both require a cooling power and capacity. However, the change is not easy: IA infrastructure is more expensive by Megawatt (millions against hundreds of thousands for Bitcoin exploitation), requiring significant capital investment.
Some minors adopt hybrid models, allocating part of their calculation power to AI workloads while maintaining Bitcoin extraction operations. Companies like Hive Digital Technologies, Hut 8, Core Scientific and Bit Digital have already made the jump, guaranteeing contracts of lucrative AI to grow and stabilize their cash flows.
Final reflections
The Bitcoin intermediary in 2025 is no longer just the Bitcoin price. Institutional capital, hash derivatives and diversification led by AI reshape the industry, giving minors new tools to manage risks and optimize income. At the same time, pressures after performance, increase in competition and infrastructure costs have made efficiency and adaptability more critical than ever.
For investors and advisers, it is essential to understand these changes. Operating stocks no longer move in locking with Bitcoin, and new financial instruments modify the operation of minors. While the industry continues to mature, those who recognize these structural changes will be better placed to navigate the opportunities to come.
– Ben Harper, Director, Luxor Technology
Ask an expert
Are Bitcoin minors really serious about the introduction by break-in on the AI market?
Absolutely. Since 2022, Bitcoin minors are exploring more and more AI operations and high performance calculations (HPC). Some of the first movers of this quarter were Hut 8, Hive, Iren, Core Scientific and Bit Digital. More recently, Riot has put its expansion of 600 MW in Corsicana on break to assess the site for the burden of AI, Cipher received an investment of $ 50 million in softbank for its own IA project, and Lancium and Crusoe Energ part of the Stargate project.
How will Bitcoin minors tackle their AI transitions? Is there a unique approach?
AI / HPC strategies vary from one minor to another. Hut 8 and Bit Digital, for example, have chosen to acquire companies from existing data centers rather than creating their own data centers from zero or modernizing the existing infrastructure. Core Scientific, on the other hand, consists in converting the massive power assets and infrastructure he has in hand for an AI / HPC load in his partnership with Coreweave (Riot could follow a similar model if he decides to convert parts of its Corsicana campus in an AI Data Center). And others, like Hive and Iren, bought GPUs to operate the AI / HPC cloud services within their existing installations. Each of these strategies has compromises (the Hut 8 digital model and Bit is a low risk, a low reward, while the Core Scientific approach is a high risk, a high reward), and we will have a better idea of what approach is the most successful in the next few years.
With high market demand for AI, will Bitcoin minors always exploit Bitcoin?
For the moment, many bitcoin minors – including Mara, Cleanspark and Bitfarms – are still focusing on Bitcoin farm instead of chasing the AI / HPC golden rabbit. Even if Bitcoin minors convert parts of their AI / HPC infrastructure, they will probably still exploit Bitcoin, even if they reduce their concentration on this pursuit. In the end, the extraction of Bitcoin and AI / HPC are more complementary than competitive, because minors can use Bitcoin exploitation to monetize the energy they have already paid when the IA / HPC demand is low.
– Colin Harper, editor -in -chief, media blockspace
