Bitcoin miners vs the ETFs, one month later

Bitcoin miners report, February 2024

Last year we identified the Bitcoin miners as a good leveraged bet on Bitcoin for the next bull market.

At the same time we also noted that the introduction of spot Bitcoin ETFs is the major risk to our Bitcoin miners investment thesis.

Now we are facing this risk head on. So one month after the introduction of the Bitcoin ETFs what is the impact on the miners stocks?

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P.S. we have just released a new dashboard on the Bitcoin miners. The purpose of this dashboard is to track if the Bitcoin miners stocks are over priced or under priced relative to Bitcoin. Paid subscribers can check it out here.

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Bitcoin miners vs the ETFs, one month later

The Bitcoin miners thesis is simple. 

The profitability of the Bitcoin mining companies strongly depends on Bitcoin's price. That make the Bitcoin miners stocks closely tied to BTC and thus good proxies for getting exposure to the Bitcoin market. 

At the same time those miners stocks are small. Much smaller than Bitcoin. So capital inflows in the miners market tend to create outsized returns.

The investment thesis is that in the coming bull market, the institutional money will want to own Bitcoin miners stocks in order to get exposure to BTC. The buying pressure coming from that demand will make it so that the Bitcoin miners stocks will deliver returns that are several times larger than Bitcoin itself over the same period.

This is the bet we are tracking in our monthly miners report.

The takeaway

One month after the launch, the miners are not suffering from the Bitcoin ETFs. Most of them are still highly correlated to Bitcoin. Half of them have outperformed BTC over the past three months.

Said differently, our investment thesis for the miners isn’t dead.

But it is true that the more options investors have to get exposure to Bitcoin the more picky they can be when choosing which miner to buy.

The ETFs will have an impact for sure. So lets examine the situation one month after the launch.

The ETFs are not changing the market dynamic for the miners