Michael Saylor made another sale. But this time, it was huge.
For a company that stayed glued to its “never sell Bitcoin” motto for the longest time, this is the second time the company is opting to dump from its stash.
However, the move seemed to trigger a different price movement for Bitcoin miners.
Related: Michael Saylor reveals why Strategy sold Bitcoin and why critics are wrong
Bitcoin miners surge
Bitcoin mining is the process where computers solve complex cryptographic puzzles to validate transactions and add them to Bitcoin’s blockchain. Miners compete using specialized hardware, and the winners earn newly created Bitcoin plus transaction fees as rewards.
This process, called “proof-of-work,” secures the network, prevents fraud like double-spending, and controls the rate at which new Bitcoin enters circulation.
On July 6, popular Bitcoin mining stocks showed a surge in intraday activity.
As of press time, IREN (NASDAQ: IREN) was up by 13.4% and trading near $44 while TeraWulf (NASDAQ: WULF) was trading near $23.5, up by 11%.
Cipher Digital (NASDAQ: CIFR) was up 10.83% and trading near $22.2 while HIVE Digital (NASDAQ: HIVE) posted a 5.40% jump to trade near $3.41.
It is important to note that these companies are not pure-play miners anymore, thanks to the falling profit margins.
Over the past year or so, these companies have started pivoting toward AI.
The lease is expected to bring in approximately $19 billion of contracted lease revenue over the initial term.
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Is investor sentiment shifting?
For years, Strategy enjoyed a certain kind of privilege of being a proxy for Bitcoin.
But there seems to be a shift in investor confidence after Strategy’s repeated sales. Investors seem to be looking elsewhere for better proxies of Bitcoin. And what can be better than Bitcoin mining stocks?
“Even if you are bullish on Bitcoin, owning MSTR is the worst way to make that bet.”
What Reddit has to say
Reddit has been divided after Strategy’s sale of Bitcoin. While many have questioned the timing, a few feel it was right move.
“If preserving cash on the balance sheet and funding obligations from a modest BTC sale gives investors greater confidence in the resilience of the structure, that’s a rational tradeoff.”
As for stocks like IREN and TeraWulf, Redditors are fairly confident about their ongoing pivots to AI.
Related: Could AI and Bitcoin mining mitigate the looming energy shortage?
Bitcoin hashrate sends new signal
Bitcoin’s hash rate, the total computing power miners use to process transactions on the network, has fallen about 11% year-to-date on average, Bernstein’s analysts wrote.
U.S. miners’ share of total network hash rate has slipped more than 40 basis points over the past two quarters, while emerging-market miners have picked up roughly 100 basis points.
Blockchain.com
As seen on the graph above, Bitcoin hash rate rose in tandem with its price through most of this cycle. But it has recently turned volatile and declined as price fell below the miners’ estimated breakeven cost.
This is a sign that margins to mine Bitcoin have compressed, pushing higher-cost miners offline rather than hash rate continuing to climb. At press time, Bitcoin’s hash rate stood at 933.56 EH/s.
JPMorgan expects this heightened sensitivity, along with more frequent large difficulty adjustments, to persist as long as bitcoin stays below that threshold.
At press time, Bitcoin traded near $63,586 while JPMorgan estimates the cost of mining one Bitcoin at $78,000.
