BITCOIN MINING

There’s Simply Not Enough Bitcoin! — Bitcoin Mining Landscape Overview

Data, trends, and insights in the Bitcoin mining industry

Lumerin Protocol
Lumerin Blog
Published in
3 min readFeb 15, 2024

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Key takeaways:

  • Bitcoin ETFs are absorbing over 10 times the new coin issuance
  • Are Bitcoin ETFs eating bitcoin mining stock’s lunch?
  • Southern US wants more miners to set up shop in the region

Bitcoin ETFs Are Absorbing Over 10 Times the Total New Coin Issuance

Bitcoin exchange-traded funds (ETFs) are witnessing a surge, absorbing over 10 times the amount of Bitcoin produced by miners in the last two trading days.

On February 12, spot Bitcoin ETFs attracted $493.4 million, with BlackRock’s iShares Bitcoin Trust leading at $374.7 million, followed by Fidelity’s Wise Origin Bitcoin Fund at $151.9 million.

This inflow far exceeded the 1,059 BTC ($51 million) mined on the same day. A similar trend occurred on February 9, with ETFs receiving 12,700 BTC ($541.5 million) compared to 980 BTC ($45 million) from mining.

📈 Currently, there is 12.5 times more demand for Bitcoin than its daily production, showing Wall Street’s growing interest.

Around 80% of the total Bitcoin supply hasn’t moved in the past six months, with only approximately $200 billion in BTC being tradable.

More importantly, ETFs have absorbed 5% of the entire tradable Bitcoin supply in the last 30 days, which explains the positive price action seen in the last month.

Are Bitcoin ETFs Eating Bitcoin Mining Stock’s Lunch?

According to a Galaxy Research report, spot Bitcoin exchange-traded funds (ETFs) pose a long-term threat to publicly traded cryptocurrency miners.

The report suggests that before the approval of these ETFs, public mining stocks were a primary means for investors to gain exposure to Bitcoin price increases.

However, with the entry of more sophisticated investors into the market, miners now need to showcase their earnings potential to compete effectively with spot Bitcoin investments.

In the short term, spot Bitcoin ETFs is likely to impact investor decisions regarding investing in public mining stocks. Retail investors may continue to view miners as a leveraged long Bitcoin trade, with ETFs serving as the main benchmark for performance.

📈 Institutions are currently favoring Bitcoin ETFs over mining stocks, influencing market trends since the beginning of 2024.

As Bitcoin ETFs gain popularity, they provide a regulated avenue for investors to access Bitcoin’s potential without directly owning the cryptocurrency, potentially affecting demand for Bitcoin itself and impacting variables like mining profitability and market sentiment.

Southern US Wants More Miners to Set Up Shop in the Region

A recent legislative proposal in Missouri aims to position the state as a Bitcoin mining hub, treating miners like any other player in the energy sector.

🏛️ State Rep. Phil Christofanelli emphasizes fair play, seeking to prevent exorbitant power costs for crypto mines, promoting crypto-freedom in the state.

The move reflects a recognition of Bitcoin mining’s potential economic benefits, andhopes to attract investment from Bitcoin miners as it’s happening in other states.

For example, CleanSpark announced an expansion in Mississippi with a $19.8 million acquisition of three mining facilities, showcasing industry growth despite regulatory challenges. Riot, on the other hand, invested $333 million in a 1 gigawatt Bitcoin mining facility in Corsicana, Texas, highlighting the sector’s infrastructure development and job creation.

Missouri’s legislative efforts and industry expansions signal a thriving crypto landscape with the potential to reshape regional economies.

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Lumerin Protocol
Lumerin Blog

Sublayer network where users can access all kinds of data as RWAs: Bitcoin hashrate or AI compute power, in a completely secure, frictionless & P2P manner