Investors shift away from Bitcoin mining stocks as spot ETFs open new avenue, Luxor says

15 March 2024

in Mining

Reading Time: 2 mins read

With the approval of spot Bitcoin ETFs, traditional investors seem no longer relying on crypto-friendly mining stocks as a proxy to gain access to BTC.

Publicly traded Bitcoin (BTC) mining companies have traditionally served as a gateway for investors to gain exposure to the largest cryptocurrency by market capitalization without directly owning it. However, the recent approval of spot Bitcoin exchange-traded funds (ETFs) has dramatically changed this dynamic.

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In a statement to crypto.news, Alessandro Cecere, marketing specials at Bitcoin mining services firm Luxor Technologie said that the market “may now be starting to price in” the fourth halving — due in mid-April — and investors are no longer utilizing stocks of public mining companies to obtain exposure to Bitcoin, as they once did.

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“The market may now be starting to price in the 4th halving, and now that Bitcoin ETFs have been approved, and experienced a successful launch, investors aren’t forced to obtain exposure to Bitcoin through mining stocks, leading to a reduction in the average premium to BTC spot they used to have.”

Alessandro Cecere

As crypto.news reported earlier, CryptoQuant CEO Ki Young Ju highlighted an uptick in miners’ selling activity since 2012, indicating increased selling pressure on Bitcoin.

However, Ju suggested that the current bull market would likely persist unless there is a slowdown in ETF inflows. He also noted that U.S. mining companies are not the primary Bitcoin sellers, implying that offshore or older miners may be the top sellers.

Addressing these developments, Cecere attributed the ability of publicly listed miners to issue new shares as a way to raise capital, which is not available to private miners. This distinction may explain why U.S.-based mining companies have not yet started selling off their crypto holdings, Cecere noted.

“With interest rates at high levels compared to the last bull market, issuing new debt is not as attractive anymore, this might explain why overseas miners are selling Bitcoin as they prepare for a significant reduction in revenues after the halving.”

Alessandro Cecere

Following Ki Young Ju’s statement, Bitcoin’s price experienced a downturn, dropping below the $70,000 level late on Mar. 14. As of press time, BTC is trading at $68,230, according to CoinMarketCap.

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