In today’s edition, Ben Harper from Luxor Technology gives an update on what’s happening to Bitcoin Mining this year.
Then Colin Harper from BLOCKSPACE MEDIA answers questions about the subject mining and AI in Ask and Expert.
– Sarah Morton
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Bitcoin mining has changed – it’s no longer just about the price
Bitcoin – mining’s investment thesis used to be simple – miners thrived as Bitcoin’s price rose and when it fell, they suffered. But by 2024, this equation changed. Bitcoin ETFs, Hashrate Markets and AI have fundamentally reshaped the industry, reducing the miners’ dependence on Bitcoin’s price. Here is the reason why mining is no longer just an effort on Bitcoin and what it means for investors.
2024: The year Bitcoin Mining diverged from Bitcoin’s Price
By 2023, Bitcoin mining stocks behaved like a high-beta-proxy for Bitcoin, which reinforced its movements-sky highs higher as Bitcoin gathered and crashed harder as it fell. But by 2024 this pattern broke down. Despite Bitcoin reaching new heights all the time, mining stocks failed to regain their former peaks.
The table below illustrates the changing relationship between the Hash Rate Index’s Crypto Mining Index and Bitcoin’s Price, comparing weekly prices and returns before and during 2024:
Source: HashRate Index, June 2020 – December 2024
Takeaway is clear: Bitcoin mining is no longer just a straightforward bet at Bitcoin’s price. This divergence stems from four central trends that shape the sector:
1. Institutional Bitcoin -Admission: The emergence of spot -Tfs
The launch of Spot Bitcoin ETFs in January 2024 reshaped institutional investments in Bitcoin. With ETFs totaling over 1.3 million BTC and surpassed $ 100 billion in assets under management, the appeal disappeared when a Bitcoin Proxy disappeared. Instead of using miners as an indirect exposure, capital flowed directly into Bitcoin via ETFsBasic changing market dynamics.
2. Halvation and its demand: a squeeze on miner Economics
Bitcoin’s fourth halving in April 2024 cuts the block grant from 6.25 BTC to 3,125 BTC per Block, which cuts the miners’ primary source of income in half. Historically, Bitcoin price increases after half have helped offset lower rewards, but this time miners were facing further headwinds:
- Record -high network problems. Increasing competition reduced individual miner rewards.
- Falling transaction fees. Lower demand for BlockSpace reduced a decisive secondary income stream.
- Hashprice collapse. Despite Bitcoin’s rally, Hashprice fell, an all-in-target for mining income per year. Calculation unit (ie hash rate), 75%.
While Bitcoin’s award rose 120% during the year, miners fought to maintain profitability, which led to consolidation and strategic turns in the industry.
Source: Hashrate index
3. The increase of hashratderivates: a game election for miners
One of the most significant economic developments in Bitcoin Mining in 2024 was the rapid expansion of the hash rate derivatives market. This new market allowed miners to uncover future income streams and reduce exposure to Bitcoin price volatility, which fundamentally changed how they control risk.
Traditionally, mining revenue was abandoned with Bitcoin’s daily price fluctuations, making it difficult for operators to predict cash flows or secure financing. But with the increase of hash rate markets, miners could sell future hashrate production at a fixed price and lock the revenue months in advance. This economic instrument works in the same way as raw material futures in the energy sector, where electricity manufacturers Pre-Sell power contracts to stabilize income.
By 2024, these once-nascent markets experienced explosive growth. Over-the-counter (OTC) Quantities increased more than 500% year-over years on Luxor’s Hashrate Pip Market, with contractual life that extends up to 12 months. Meanwhile, regulated exchange trading took a big step forward with bitnomial launch of hashrate futures, making it the first regulated exchange to offer a Bitcoin mining -derivatter product.
The ripening of hashrate tips markets signalizes a new era in mining -one where miners have greater control over their income streams, better access to capital and improved resilience to Bitcoin price volatility.
4. Bitcoin Mining meets AI & HPC: A Convergence of Industries
With mining under pressure, Many companies turn to AI and high performance computing (HPC) to diversify revenue. Bitcoin Mining Infrastructure shares key similarities to AI data centers – both require huge power and cooling capacity. However, the change is not easy: AI infrastructure is more expensive per day. Megawatts (millions vs. hundreds of thousands to Bitcoin mining), requiring significant capital investments.
Some miners embrace hybrid models that assign some of their computing power to AI workloads while maintaining Bitcoin mining. Companies such as Hive Digital Technologies, Hut 8, Core Scientific and Bit Digital have already made jumped, ensuring lucrative AI contracts to grow and stabilize their cash flows.
Last thoughts
Bitcoin mining in 2025 is no longer just about Bitcoin’s award. Institutional capital, hashrate derivatives and AI-driven diversification transforms the industry, giving miners new tools to manage risk and optimize revenue. At the same time, the pressure after half, increasing competition and infrastructure costs has made efficiency and adaptability more critical than ever.
For investors and advisers, it is important to understand these shifts. Mining stocks are no longer moving in Lockstep with Bitcoin, and new financial instruments change how miners work. As the industry continues to mature, those who recognize these structural changes will be better placed to navigate the upcoming opportunities.
– Ben Harper, Director, Luxor Technology
Ask an expert
Are Bitcoin -mine workers actually serious about breaking into the AI market?
Absolutely. Since 2022, Bitcoin miner workers have increasingly investigated business lines AI and High-Performance Compute (HPC). Some of the earliest movements in this shift were Hut 8, Hive, Iren, Core Scientific and Bit Digital. Recently, Riot paused Riot his 600 MW expansion on Corsicana to pause to evaluate the site of AI load, FIFHER received an investment of $ 50 million from Softbank for his own AI project, and Lancium and Crusoe Energy build a Multi-Gigawatt Campus for AI as as part of Project Stargate.
How will Bitcoin Miners tackle their AI transitions? Is there a one-size that fits all approach?
AI/HPC strategies vary from mines to mines. For example, Hytte 8 and Bit Digital have chosen to acquire existing data center companies rather than build their own data centers from scratch or retrofit existing infrastructure. On the other hand, Core Scientific Converts the massive power assets and infrastructure it has available for AI/HPC load in its partnership with Coreweave (Riot could follow a similar model if it decides to convert parts of its Corsicana -Campus to an AI Data Center). And others who HIVE and IREN have purchased GPUs to serve AI/HPC Cloud Services within their existing facilities. Each of these strategies has trade -offs (Hytten 8 and Bit Digital Model is low risk, low reward, while core scientific approach is high risk, high reward), and we will have a better idea of which approach is the most successful in the race of the next few years.
With a strong market’s demand for AI, will Bitcoin mine workers still my Bitcoin?
Currently, lots of Bitcoin mine workers – including Mara, Cleanspark and BitFarms – are still focusing on Bitcoin mining instead of chasing AI/HPC Golden Rabbit. Even if Bitcoin mine workers convert parts of their infrastructure to AI/HPC load, they are likely to still my Bitcoin, even if they reduce their focus on this persecution. In the end, Bitcoin Mining and AI/HPC are more complementary than competitive, as miners can use Bitcoin mining to make money on energy that they have already paid for when the AI/HPC demand is low.
-Colin Harper, editor -in -chief, Blockspace Media
