{"id":184310,"date":"2023-10-31T14:33:06","date_gmt":"2023-10-31T09:03:06","guid":{"rendered":"https:\/\/dripp.zone\/news\/?p=184310"},"modified":"2023-10-31T14:33:06","modified_gmt":"2023-10-31T09:03:06","slug":"why-a-bitcoin-etf-is-making-btc-miners-nervous-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/why-a-bitcoin-etf-is-making-btc-miners-nervous-crypto-news\/","title":{"rendered":"Why a Bitcoin ETF Is Making BTC Miners Nervous – Crypto News"},"content":{"rendered":"
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With the first U.S. spot Bitcoin ETF seemingly in sight, it has seemed like the entire crypto industry is optimistic about how such a product could bolster Bitcoin\u2019s legitimacy in the investing world, ignite institutional adoption, and send the price of BTC <\/span>to the moon<\/span><\/a>.\u00a0<\/span><\/p>\n

For the most part, that includes Bitcoin mining firms\u2014companies that run large computer fleets dedicated to securing the Bitcoin network and earning newly minted coins. However, a key fact about the current Bitcoin investing landscape may leave investors in mining firms a bit concerned.\u00a0<\/span><\/p>\n

\u201cWe are optimistic about the ETFs, and there are indications it will be positive,\u201d Isaac Holyoak, CleanSpark’s Chief Communications Officer, told <\/span>Decrypt<\/span><\/i>. Mining stocks, he noted, tend to inherit Bitcoin\u2019s positive momentum during bullish periods. <\/span>
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<\/span>Though Bitcoin itself is up over 100% this year, public <\/span>mining stocks<\/span><\/a> have averaged even stronger returns \u2013 alongside other <\/span>BTC-adjacent firms<\/span><\/a>. Until now, such companies have acted as regulated, more traditional leverage plays on BTC for investors in the absence of an ETF.<\/span><\/p>\n


<\/span>Yet therein lies the rub: Though Bitcoin ETFs may appear promising, they may also suck capital away from stocks that investors have until now treated as the next best thing. <\/span>
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<\/span>For their part, CleanSpark remains optimistic, keeping its focus on Bitcoin\u2019s price. \u201cRecent developments\u2014both the <\/span>false claim<\/span><\/a> of an ETF and the hinting of one with the <\/span>CUSIP listing<\/span><\/a>\u2014both spurred an increase in the price of bitcoin,\u201d highlighted Holoyak.\u00a0<\/span><\/p>\n

Since most of a mining firm\u2019s revenue stems from fixed BTC block rewards, a rising BTC price translates to higher USD-denominated revenue for the entire industry.\u00a0<\/span><\/p>\n

Anticipating higher future prices, Cleanspark has been <\/span>dumping<\/span><\/a> millions of dollars into mining equipment this year to give it the greatest competitive edge.\u00a0<\/span><\/p>\n

In an October mining industry report shared with <\/span>Decrypt<\/span><\/i>, J.P. Morgan equity analyst Reginald L. Smith labeled CleanSpark (CLSK) an overweight stock, thanks to having acquired hardware and facilities at \u201cdeeply discounted prices,\u201d and running a highly efficient fleet. CLSK is up 122% year to date.\u00a0<\/span><\/p>\n

Another firm to make major infrastructure investments this year is Iris Energy (IREN)\u2014a renewable-focused miner that\u2019s particularly bullish on the upcoming Bitcoin halving. Smith also rated Iris shares, which are up 161% this year, as \u201coverweight.\u201d<\/span><\/p>\n

\u201c[The halving] historically involved an additional price catalyst as coins become even scarcer,\u201d said Daniel Robert, co-founder and co-CEO of Iris Energy. \u201cAdd in a potential easing of macro monetary conditions over the next 6-12 months and we could be in for a very interesting period for Bitcoin.”<\/span><\/p>\n

Regarding an ETF, Roberts noted that SEC approval could open \u201csubstantial pools\u201d of capital to the Bitcoin market, compounding with bullish effects from the halving and easing macro conditions.\u00a0<\/span><\/p>\n

A spot Bitcoin ETF differs from existing Bitcoin investment products in the United States, in that its shares would be directly redeemable for a fixed amount of BTC held by the provider and its partners.\u00a0<\/span><\/p>\n

\u201cA spot ETF would be infinitely preferable to the fund options on the market today,\u201d explained HIVE Digital CEO Aydin Kilic to <\/span>Decrypt.<\/span><\/i> \u201cIt would unlock this asset class for professional investors and retail retirement accounts.\u201d<\/span><\/p>\n


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<\/span>One of the primary options in the stock market today is the Grayscale Bitcoin Trust (<\/span>GBTC<\/span><\/a>), which has high fees and doesn’t accurately track the price of Bitcoin.\u00a0<\/span><\/p>\n

Shares in the trust currently trade at a discount to the fund\u2019s underlying BTC holdings. This discount has narrowed over time as confidence grows that the fund\u2019s efforts to convert into a spot Bitcoin ETF will prove successful, and will vanish entirely if\/when approved.\u00a0<\/span><\/p>\n

While some might prefer to purchase and personally hold BTC outright, many retail investors may be less comfortable with buying coins from crypto-specific platforms, which are often unregulated. Furthermore, as Iris\u2019s Roberts elaborated, physical Bitcoin investment is outright impossible for many larger firms.<\/span>
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<\/span>\u201cBoth institutional investment mandates, as well as those of general retail stockbroking services, often prohibit investment of client capital outside specifically defined instruments and securities,\u201d he said. \u201cAn ETF is likely to solve this.\u201d\u00a0<\/span><\/p>\n


<\/span>After GBTC, some of these options include the crypto exchange Coinbase (COIN.;+120% YTD) and the futures-based ProShares Bitcoin Strategy ETF (BITO; +64% YTD). Beyond them, however, are the more than dozen publicly traded miners that have performed well against Bitcoin\u2014so far.\u00a0<\/span><\/p>\n

In a <\/span>podcast interview this week<\/span><\/a>, J.P. Morgan\u2019s Smith highlighted Marthon Digital and Riot Platforms\u2014two of the largest Bitcoin mining companies\u2014as indirect Bitcoin investments that may be inferior to an ETF.<\/span>
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<\/span>\u201cIt gives you a cleaner play on Bitcoin than buying Riot or Marathon,\u201d he said. \u201cWith that type of purchase you\u2019re dealing with hashrate, outages, things like that.\u201d<\/span>
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<\/span>\u201cIt also could introduce a whole other realm of arbitrage opportunities, where maybe it’s cheaper to buy Bitcoin outright and lever up versus buying indirectly through one of the miners,\u201d he added. <\/span>
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<\/span>When asked about this dynamic, Bitcoin mining firm and pool operator Foundry Digital acknowledged how an ETF could produce \u201ccounterintuitive negative consequences\u201d for the industry. <\/span>
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<\/span>\u201cOver the past few years, mining companies have been used as proxies to get access to Bitcoin exposure in the public markets,\u201d said Alex Altman, CFA and Senior Manager of Corporate Development at Foundry. \u201cIt will be interesting to see how these new ETF vehicles will impact public miner valuations as investors will now have a more direct, cost-effective way to access the asset class.\u201d<\/span>
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Stay on top of crypto news, get daily updates in your inbox.<\/h3>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

With the first U.S. spot Bitcoin ETF seemingly in sight, it has seemed like the entire crypto industry is optimistic about how such a product could bolster Bitcoin\u2019s legitimacy in the investing world, ignite institutional adoption, and send the price of BTC to the moon.\u00a0 For the most part, that includes Bitcoin mining firms\u2014companies that […]<\/p>\n","protected":false},"author":2,"featured_media":184311,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-184310","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/184310","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=184310"}],"version-history":[{"count":2,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/184310\/revisions"}],"predecessor-version":[{"id":184313,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/184310\/revisions\/184313"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/184311"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=184310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=184310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=184310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}