Gain Market Share or Go All-In on AI?

Traders proceed to pay a premium for miners diversifying into AI and HPC knowledge facilities, regardless of pure-play miners gaining market share.

Marathon, Riot and CleanSpark all noticed increased manufacturing numbers in September than August.

Marathon produced extra bitcoin in September than in every other month because the April halving.

Disclosure: The writer of this story owns shares of the next bitcoin miners: IREN (IREN), MARA Holdings (MARA), Cipher Mining (CIFR), Bitfarms (BITF), Riot Platforms (RIOT) and CleanSpark (CLSK).

Bitcoin (BTC) miners are dealing with the strangest form of existential menace on this period of scant earnings: They’ll pivot to powering synthetic intelligence (AI) or high-performance computing (HPC) and watch their shares soar, or they will stick round and dominate their authentic turf, however see a languishing inventory value.

That was the story of mining in September, anyway, by way of fairness returns.

Miners with the biggest market capitalizations – MARA Holdings (MARA), Riot Platforms (RIOT) and CleanSpark (CLSK) – all elevated their share of the full quantity of bitcoin mined final month versus August. These firms have a lot stronger stability sheets and bigger mining operations, which helps them navigate the discount in mining profitability spurred by the bitcoin halving in April.

Nonetheless, buyers aren’t paying a premium for his or her shares, as they continued to underperform in September. In the meantime, miners placing give attention to AI and HPC computing, corresponding to Core Scientific (CORZ), TerraWulf (WULF) and IREN (IREN), beat bitcoin in September.

The shift in investor sentiment is not stunning, because the halving in April – which reduce by 50% the reward for mining BTC – has made mining extra aggressive with narrower revenue margins. Including to the unfavourable sentiment, the current approval of spot bitcoin exchange-traded funds (ETFs) within the U.S. has diminished buyers’ urge for food for mining shares.

As a substitute, buyers are rewarding miners that now use a part of their knowledge facilities to host AI- and HPC-related machines to diversify their income. AI and HPC computing require a considerable amount of energy, which bitcoin miners have already secured, making them a sexy useful resource for AI and HPC firms that need to shortly ramp up their companies.

Learn extra: Non-public Fairness Giants Are Circling Bitcoin Miners on AI Attract

In actual fact, trying on the share costs of publicly traded miners in September, shares of miners with bigger market caps rose between 4% and 9%. Miners with hyperlinks to AI and HPC noticed positive factors as giant as 25% for the month. Bitcoin’s value rose about 7%, whereas the CoinDesk 20, a broad crypto market benchmark, climbed about 12%.

Miners are already surging in October, too, regardless of bitcoin buying and selling comparatively flat. Riot is up 12% and Cipher Mining (CIFR) is up 8%. October can also be traditionally one of many strongest months for bitcoin, incomes it the nickname “Uptober.”

September’s takeaway

Mining economics are robust after the halving.

The hashrate of the Bitcoin community, on a seven-day transferring common, rose to an all-time excessive of 693 exahashes per second, or EH/s, whereas sustaining a median hash fee of 630 EH/s. Hashrate, a proxy for the way aggressive mining is, measures how a lot computing energy is on-line on the community.

September additionally noticed bitcoin issue – a measure of how onerous it’s to mine a brand new block within the community – hit an all-time excessive. Bitcoin’s issue is a measure of how onerous it’s to mine a brand new block within the community, which adjusts each 2,016 blocks based mostly on the computational energy, guaranteeing the blocks are persistently mined each 10 minutes. In the meantime, the hashprice, a measure of miners’ profitability, hit a one-month excessive at $48.0 PH/s, in accordance with Glassnode, regardless of remaining close to all-time lows.

Drilling down into the person miners’ month-to-month knowledge, it appears MARA – the biggest publicly traded miner with a market cap of $4.8 billion, and the corporate previously referred to as Marathon Digital – had a profitable September, rising their energized hash fee by 5% in September to 36.9 EH/s. MARA additionally mined 705 BTC, a 5% enhance from the earlier month and probably the most mined in a single month because the halving in April. The agency additionally elevated its BTC holdings to 26,842, the second-largest bitcoin stockpile amongst publicly traded firms, trailing solely MicroStrategy. On the similar time, it remained on observe to succeed in 50 EH/s by the top of 2024.

The third-largest miner by market cap, Riot Platforms, additionally elevated its mined bitcoin by 28% throughout September, as the corporate elevated computing energy throughout its services. Riot estimates to hit a hashrate of 36.3 EH/s within the fourth quarter of 2024 and 56.6 EH/s by the second half of 2025. Riot at the moment holds 10,427 BTC in its stability sheet.

Hurricane Helene, promoting BTC for land

Amongst different traits that stood out throughout September embody influence from Hurricane Helene. CleanSpark, the fourth-largest miner by market cap, was amongst that had been affected. The corporate mentioned it did not see any materials losses to its infrastructures however needed to shut down some operations as a result of storm.

With robust capital markets for bitcoin miners, the businesses began to make use of inventive technique of elevating funds to develop their operations. One, Cipher Mining, stood out in September by mining 155 BTC for the month and promoting 923 bitcoin to purchase a 300MW mining website, which will probably be used for HPC internet hosting. The miner now owns 1,512 BTC.