Crypto for Advisors: Bitcoin Mining Will Be Different in 2025
2025-02-06
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In today’s issue, Ben Harper from Luxor Technology provides an update on what’s happening with bitcoin mining this year.
Then, Colin Harper from Blockspace Media answers questions on the topic of mining and AI in Ask and Expert.
– Sarah Morton
You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks digital assets for financial advisors. Subscribe here to get it every Thursday.
Bitcoin Mining Has Changed — It’s No Longer Just About the Price
The bitcoin mining investment thesis used to be simple — miners thrived when bitcoin’s price soared, and when it fell, they suffered. But in 2024, that equation changed. Bitcoin ETFs, hashrate markets and AI have fundamentally reshaped the industry, reducing miners' dependence on bitcoin’s price. Here’s why mining is no longer just a bet on bitcoin, and what this means for investors.2024: The Year Bitcoin Mining Diverged From Bitcoin’s Price
In 2023, Bitcoin mining stocks behaved like a high-beta proxy for Bitcoin, amplifying its moves — soaring higher when bitcoin rallied and crashing harder when it fell. But in 2024, this pattern broke down. Despite bitcoin reaching new all-time highs, mining stocks failed to reclaim their previous peaks.
The table below illustrates the shifting correlation between Hashrate Index’s Crypto Mining Index and bitcoin’s price, comparing weekly prices and returns before and during 2024:
Ask an Expert
Are bitcoin miners actually serious about breaking into the AI market?
Absolutely. Since 2022, bitcoin miners have been increasingly exploring AI and high-performance compute (HPC) business lines. Some of the earliest movers in this shift were Hut 8, Hive, IREN, Core Scientific and Bit Digital. More recently, Riot put its 600 MW expansion at Corsicana on pause to evaluate the site for AI load, Cipher received a $50 million investment from SoftBank for its own AI project, and Lancium and Crusoe Energy are building a multi-gigawatt campus for AI as part of Project Stargate.
How will bitcoin miners tackle their AI transitions? Is there a one-size-fits-all approach?
AI/HPC strategies vary from miner to miner. Hut 8 and Bit Digital, for example, have opted to acquire existing data center businesses rather than build their own data centers from scratch or retrofit existing infrastructure. Core Scientific, on the other hand, is converting the massive power assets and infrastructure it has on hand for AI/HPC load in its partnership with CoreWeave (Riot could follow a similar model should it decide to convert portions of its Corsicana campus into an AI data center). And others, like Hive and IREN, have purchased GPUs to operate AI/HPC cloud services within their existing facilities. Each of these strategies have tradeoffs (the Hut 8 and Bit Digital model are low risk, low reward, while Core Scientific’s approach is high risk, high reward), and we will have a better idea of which approach is the most successful over the next few years.
With strong market demand for AI, will bitcoin miners still mine bitcoin?
For now, plenty of bitcoin miners — including MARA, Cleanspark and Bitfarms — are still focusing on bitcoin mining instead of chasing the AI/HPC golden rabbit. Even if bitcoin miners convert parts of their infrastructure into AI/HPC load, they will likely still mine bitcoin, even if they reduce their focus on this pursuit. Ultimately, bitcoin mining and AI/HPC are more complementary than competitive, as miners can use bitcoin mining to monetize energy that they have already paid for when AI/HPC demand is low.
- Colin Harper, editor-in-chief, Blockspace Media
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