After the Bitcoin halving took place in April, major Bitcoin miners have increasingly started choosing one of two strategies — either hodl the BTC they mine or gear up with artificial intelligence (AI). The BTC halving slashes the earings of miners by half every four years — a deflationary mechanism that also helps maintain the hard cap of 21 million Bitcoin.
Public miners like MARA Holdings, Riot Platforms, and CleanSpark are holding the BTC they mine in the hope that its value will increase over time.
Wolfie Zhao, an analyst at research firm TheMinerMag, told Bloomberg:
“By avoiding the immediate sale of Bitcoin at a loss, they [miners] can keep potential losses unrealized and position themselves for gains if a bull market materializes.”
However, the strategy that is popular with crypto mining stock traders is an investment in AI. For instance, the stock of Core Scientific nearly quadrupled since it announced the signing of multi-billion-dollar contracts with AI startup CoreWeave. Core Scientific emerged from bankruptcy with a successful restructuring earlier this year.
At the same time, stocks of MARA and Riot, who are betting on holding BTC, have dropped by 20% and 36%, respectively, this year. Similarly, shares of Iris Energy and Bit Digital, which have been investing in AI, have been faring better than those holding BTC.
The strategy of holding BTC seems feasible since miners like MARA and Clean Spark run profitable operations. Besides, in a market with rising Bitcoin prices, the strategy appears to be a good one.
In fact, with the market rising, Bitcoin miners have again started borrowing and issuing more shares. And those like MARA are using the funds to buy more crypto, following in the footsteps of MicroStrategy.
However, Ethan Vera, chief operating officer at Luxor Technology, a Bitcoin mining software and services firm, sounded a warning. He said:
“In a rising Bitcoin price environment, it is going to be an extremely successful strategy, but it’ll be a disaster if Bitcoin prices plummet…You will continue to see negative profits and they are hiding how bad the industry is right now and how bad their operations are by diluting shareholders and buying newer machines.”
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