Crypto miners are following in the footsteps of MicroStrategy (MSTR), shifting to a Bitcoin accumulation strategy to tackle profitability pressures. According to JPMorgan (JPM), this change is largely driven by the April reward halving and a rising network hashrate, both of which have made mining more challenging. Instead of selling their Bitcoin reserves to cover costs, miners are now financing their operations through debt and equity offerings.
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Why Miners Are Hoarding Bitcoin
To understand why miners are making this shift, it’s important to know a couple of things. First, the reward halving in April reduced the number of Bitcoins miners earn per block, cutting their potential profits. Second, a rising network hashrate means more competition in the mining space, making it harder to successfully mine Bitcoins. As these pressures mount, miners are opting to accumulate more Bitcoin instead of selling it. This helps protect their holdings and long-term value, while also allowing them to raise capital through other means, like debt and equity offerings.
Miners Stockpile Bitcoin to Boost Profits
Miners like Marathon Digital Holdings (MARA) are adopting a similar strategy to MicroStrategy, hoarding Bitcoin rather than selling it off. MARA, which holds 35,000 Bitcoin worth about $3.5 billion, is now the second-largest corporate holder of Bitcoin. This strategy aims to secure long-term profitability, even amid rising mining competition.
Bitcoin ETFs Provide Investors With More Options
With the introduction of spot Bitcoin ETFs in the U.S., institutional investors now have an easier way to gain exposure to Bitcoin, reducing their reliance on mining stocks. As CoinDesk reports, miners are feeling the heat, with many raising over $10 billion in equity this year, surpassing previous records.
With miners increasingly adopting MicroStrategy’s Bitcoin acquisition strategy, it is important to keep an eye on Bitcoin’s price. At the time of writing, Bitcoin is sitting at $100,248.64.
