Don't Expect Much Of The Bitcoin Miners (For Now)

Bitcoin Miners Report, September 2024

You won't be shocked to learn that this is a difficult period for the Bitcoin miners. 

Without a more favourable market regime, a bull market for mining stocks is unlikely.

Let's break down what this means in numbers.

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Don't Expect Much Of The Bitcoin Miners (For Now)

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

Bitcoin miners are struggling, with their stocks amplifying Bitcoin's losses 2.25 times on average. 

While miners perform similarly in neutral and bullish Bitcoin regimes, they suffer greatly in bearish conditions. With Bitcoin currently on the edge of bearish territory, caution is advised for short-term investors. 

However, this volatility may present opportunities for those with a long-term outlook.

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