In today’s number, Ben Harper De Luxor Technology provides an update on what is happening with Bitcoin Mining this year.
Then, Colin Harper of Blockspace Media answers questions about the issue of mining and AI in Ask and Expert.
– Sarah Morton
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Bitcoin Mining has changed: it is no longer just the price
Bitcoin’s mining investment thesis used to be simple: the miners prospered when Bitcoin’s price shot, and when they fell, they suffered. But in 2024, that equation changed. Bitcoin ETFs, Hashrate and AI markets have fundamentally reformed the industry, reducing the dependence of Bitcoin’s price. Here is why mining is no longer just a bet in Bitcoin, and what this means for investors.
2024: The year Bitcoin Mining diverged the price of Bitcoin
In 2023, Bitcoin mining stocks behaved like a high beta proxy for Bitcoin, amplifying their movements, increasing more upwards when Bitcoin recovered and crashed more when he fell. But in 2024, this pattern broke. Although Bitcoin reached new maximums of all time, mining actions could not claim their previous peaks.
The following table illustrates the changing correlation between the Hashrat Index Crypto Mining Index and the price of Bitcoin, comparing weekly prices and returns before and for 2024:
Source: Hashrate Index, June 2020 – December 2024
Carrying food is clear: Bitcoin’s mining actions are no longer just a direct bet for the price of Bitcoin. This divergence comes from four key trends that shape the sector:
1. Bitcoin institutional adoption: the advent of the ETF spot
The launch of Spot Bitcoin ETF in January 2024 amended institutional investment in Bitcoin. With ETF accumulating more than 1.3 million BTC and exceeding $ 100 billion assets under administration, the appeal of mining shares vanished. Instead of using miners as an indirect exposure, capital flowed directly to Bitcoin through ETFSFundamentally changing market dynamics.
2. Half and its consequences: a squeeze from the mining economy
The fourth half of half of Bitcoin in April 2024 reduced the subsidy of the 6.25 BTC block to 3.125 BTC per block, cutting the main source of income from the miners in half. Historically, the bitcoin prices surveions after the sheet have helped compensate lower rewards, but this time, the miners faced winds against additional:
- Difficulty of record-high. The growing competition reduced the rewards of individual miners.
- Fall transaction rates. The lower demand for blockspace decreased a crucial flow of secondary income.
- Hashprice collapse. Despite the Bitcoin demonstration, Hashprice, a measure of mining income per calculation unit (that is, hashrate), collapsed 75%.
While the price of Bitcoin shot 120% throughout the year, the miners fought to maintain profitability, which led to consolidation and strategic pivots within the industry.
Source: hashrate index
3. The emergence of the hashrate derivatives: a change of game for miners
One of the most significant financial developments in Bitcoin Mining in 2024 was the rapid expansion of the hashrate derivative market. This emerging market allowed miners to cover future income flows and reduce exposure to Bitcoin prices volatility, fundamentally changing the way they manage risk.
Traditionally, mining income was at the mercy of Bitcoin’s daily price changes, which makes it difficult for operators to forecast cash flows or safe financing. However, with the rise of Hashrate Forward markets, miners could sell future hashrate production at a fixed price, blocking income months in advance. This financial instrument works similar to basic products in the energy sector, where electricity producers provide energy contracts to stabilize income.
In 2024, these markets that were once cascents saw explosive growth. Free sales volumes (OTC) increased more than 500% year after year in the Luxor hashrate bird market, with contractual durations that extend up to 12 months. Meanwhile, the regulated exchange trade took a great step forward with the Bitnomial launch hash.
The maturation of Hashrate Forward markets indicates a new era in mining finances, one in which miners have greater control over their income flows, better access to capital and better resilience against the volatility of Bitcoin prices .
4. Bitcoin Mining meets AI and HPC: a convergence of industries
With mining profits under pressure, Many companies are turning AI and high performance computing (HPC) to diversify income. Bitcoin’s mining infrastructure shares key similarities with AI data centers, both require great power and cooling capacity. However, the change is not easy: the infrastructure of AI is more expensive by Megavatio (Millions Vs. hundreds of thousands for Bitcoin mining), which requires a significant capital investment.
Some miners are adopting hybrid models, assigning part of their computer power to AI workloads while maintaining Bitcoin mining operations. Companies such as Hive Digital Technologies, Hut 8, Core Scientific and Bit Digital have already made the jump, ensuring lucrative contracts to grow and stabilize their cash flows.
Final thoughts
Bitcoin Mining in 2025 is no longer just about the price of Bitcoin. Institutional capital, hashrate derivatives and the diversification promoted by AI are remodeling the industry, giving new tools to manage risk and optimize income. At the same time, pressures after the sheet, the increase in competition and infrastructure costs have made efficiency and adaptability more critical than ever.
For investors and advisors, understanding these changes is essential. Mining actions no longer move in Lockstep with Bitcoin, and new financial instruments are changing the way the miners operate. As the industry continues to mature, those that recognize these structural changes will be better positioned to navigate the opportunities that are coming.
– Ben Harper, Director, Luxor Technology
Ask an expert
Are Bitcoin miners really taken in the AI market?
Absolutely. Since 2022, Bitcoin miners have been exploring more and more commercial lines of high performance AI and computer (HPC). Some of the first engines in this change were Hut 8, Hive, Iren, Core Scientific and Bit Digital. More recently, Riot put its expansion of 600 MW in Corsican of multiple gigawatts for AI so part of the Stargate project.
How will Bitcoin miners address their AI transitions? Is there a unique approach for all?
AI/HPC strategies vary from miner to mining. HUT 8 and BIT Digital, for example, have chosen to acquire existing data centers instead of building their own data centers from scratch or modernizing the existing infrastructure. Core Scientific, on the other hand, is converting mass energy assets and the infrastructure you have at hand for the AI/HPC load in your association with Coreweave (Riot could follow a similar model if you decide to convert portions of your Corsican campus in an ai ai data center). And others, such as Hive and Iren, have bought GPU to operate services in the AI/HPC cloud within their existing facilities. Each of these strategies has compensation (the HUT 8 and BIT digital model is low risk, low reward, while the Core Scientific approach is high risk, high reward), and we will have a better idea of what approach is the most successful in the next few years.
With a strong demand from the AI market, Bitcoin miners will still extract bitcoin?
For now, many Bitcoin miners, including Mara, Cleanspark and Bitfarms, are still focusing on Bitcoin mining instead of pursuing the golden rabbit AI/HPC. Even if Bitcoin miners convert parts of their infrastructure into AI/HPC loading, Bitcoin is still probable, even if they reduce their focus on this search. Ultimately, Bitcoin Mining and AI/HPC are more complementary than competitive, since miners can use bitcoin mining to monetize the energy they have already paid when the AI/HPC demand is low.
-Colin Harper, editor in chief, blockspace average
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