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 Mining Stocks No Longer Move in Lockstep With BTC. Here’s Why.

Bitcoin mining stocks used to amplify bitcoin’s price movements, but in 2024, this pattern broke down. Here's a look at the shifting correlation and the key trends shaping the sector.

Bitcoin mining stocks behaved like a high-beta proxy for bitcoin in 2023, 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:

The takeaway is clear: Bitcoin mining stocks are no longer just a straightforward bet on bitcoin’s price. This divergence stems from four key trends shaping the sector:

1. Institutional Bitcoin Adoption: The Advent of Spot ETFs

The launch of spot bitcoin ETFs in January 2024 reshaped institutional investment in bitcoin. With ETFs amassing over 1.3 million BTC and surpassing $100 billion in assets under management, the appeal of mining stocks as a bitcoin proxy faded. Instead of using miners as an indirect exposure, capital flowed directly into bitcoin via ETFs, fundamentally shifting market dynamics.

2. The Halving and Its Aftermath: A Squeeze on Miner Economics

Bitcoin’s fourth halving in April 2024 cut the block subsidy from 6.25 BTC to 3.125 BTC per block, slashing miners’ primary revenue source in half. Historically, post-halving bitcoin price surges have helped offset lower rewards, but this time, miners faced additional headwinds:

While bitcoin’s price soared 120% throughout the year, miners struggled to maintain profitability, leading to consolidation and strategic pivots within the industry.

3. The Rise of Hashrate Derivatives: A Game-Changer for Miners

One of the most significant financial developments in bitcoin mining in 2024 was the rapid expansion of the hashrate derivatives market. This emerging market allowed miners to hedge future revenue streams and reduce exposure to bitcoin price volatility, fundamentally changing how they manage risk.

Traditionally, mining revenues were at the mercy of bitcoin’s daily price swings, making it difficult for operators to forecast cash flows or secure financing. However, with the rise of hashrate forward markets, miners could sell future hashrate production at a fixed price, locking in revenue months in advance. This financial instrument functions similarly to commodity futures in the energy sector, where electricity producers pre-sell power contracts to stabilize income.

In 2024, these once-nascent markets saw explosive growth. Over-the-counter (OTC) volumes surged more than 500% year-over-year on Luxor’s hashrate forward market, with contract durations extending up to 12 months. Meanwhile, regulated exchange trading took a major step forward with Bitnomial launching hashrate futures, making it the first regulated exchange to offer a bitcoin mining derivative product.

The maturation of hashrate forward markets signals a new era in mining finance — one where miners have greater control over their revenue streams, better access to capital, and improved resilience against bitcoin price volatility.

4. Bitcoin Mining Meets AI & HPC: A Convergence of Industries

With mining profits under pressure, many firms are pivoting to AI and high-performance computing (HPC) to diversify revenue. Bitcoin mining infrastructure shares key similarities with AI data centers – both require vast power and cooling capacity. However, the shift isn’t easy: AI infrastructure is more expensive per megawatt (millions vs. hundreds of thousands for bitcoin mining), requiring significant capital investment.

Some miners are embracing hybrid models, allocating some of their computing power to AI workloads while maintaining bitcoin mining operations. Firms like HIVE Digital Technologies, Hut 8, Core Scientific, and Bit Digital have already made the leap, securing lucrative AI contracts to grow and stabilize their cash flows.