Uncertainty for the Bitcoin miners

Bitcoin miners report, May 2024

There is a lot of uncertainty for the Bitcoin miners stocks. And in today's miners report I don't have an answer for whether or not the bet is still on.

What I have is a mixed bag of data that's neither good or bad. 

But let's review the situation, where the miners stand right now and what we want to see happen next.

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Uncertainty for the Bitcoin miners

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

Let me get straight to the point, up until now the miners have not delivered the expected returns.

Depending on when you got into this trade you are either 288% up or -27% down... But what's for sure is that you have not achieved 10x the returns Bitcoin produced over the same period.

In the absence of a clear trend for Bitcoin we can't tell if the miners are past the halving scare and ready to outpace Bitcoin or if they are just going to stay undervalued relative to BTC forever.

We'll have the answer next time Bitcoin is really on the move.

Let's review what we have.

Correlations: unclear but not broken