Weekly Insights: Bitcoin mining in overdrive
Bitcoin mining is currently a hot topic. The hashrate continues to rise, and publicly traded bitcoin miners are gearing up for the upcoming bitcoin halving. And they're not just doing so by purchasing new mining equipment, but also through mergers and acquisitions in the sector. In this week's update, you'll read more about the latest developments in bitcoin mining, as well as bitcoin ETFs, the petition from HRIF.eu to the Dutch House of Representatives, and the role of MicroStrategy as a bitcoin development company.
Bitcoin ETFs a success?
On January 10, the U.S. Securities and Exchange Commission (SEC) gave the green light for spot bitcoin ETFs, leading to the approval of 11 different ETFs simultaneously. But can we say, a month later, that the launch was a success?
In some ways, yes, and in others, no. Initially, it may not have seemed so, as there was a significant outflow from the Grayscale Bitcoin ETF (GBTC), which is also relatively expensive with management fees of 1.5%. Investors may have shifted to other cheaper funds or simply taken profits after last year's bitcoin rally.
However, the bitcoin ETFs from BlackRock and Fidelity (IBIT and FBTC) have gathered more than $6 billion in bitcoin in less than a month. This makes the bitcoin ETFs the most successful launch ever, by a wide margin.
The spot bitcoin ETF is now at the top as the most successful ETF launch ever and has reached the top of the 25 leading ETFs by assets after just one month on the market (out of 5,535 total launches in 30 years).
The success of bitcoin ETFs cannot be ignored by major banks and asset managers. This week, we saw Fidelity include bitcoin as a standard investment in their All-in-One Conservative ETF.
This ETF is designed to provide a balanced investment approach, with approximately 40% stocks, 59% fixed-income ETFs, and now an additional 1% in bitcoin. The balanced version of the ETF has 2.5% bitcoin, and the aggressive version has 3.1%.
This marks a significant milestone, with bitcoin finally being recognized as a traditional investment instrument, partly due to the diversification benefits it offers. It would not be surprising if other funds follow suit in the coming years.
Petition from HRIF.eu to the Dutch House of Representatives
Last Tuesday, the Foundation for Human Rights in Finance.EU (HRIF.eu) presented its petition to the Dutch House of Representatives. With this petition, the foundation aims to emphasize the importance of everyone having access to a bank account or payment service, and to put an end to excessive monitoring by banks and the activities of Transaction Monitoring Netherlands (TMNL).
More than 14,500 individuals have signed this petition, along with organizations such as Privacy First, Bits of Freedom, and the United Bitcoin Companies Netherlands (VBNL).
HRIF.eu advocates for a return to a more humane approach in financial transactions, rather than an abundance of monitoring and information requests that are not legally mandated. They hope that the Dutch House of Representatives will recognize their petition as a signal for what is needed now: less excessive monitoring and a legal, unlimited right to a bank account or digital payment service for everyone, regardless of their background. Without these basic services, other fundamental rights are seriously compromised.
By bringing this petition to attention, HRIF.eu hopes to bring about change and amplify the voices of those affected by the current situation.
MicroStrategy as bitcoin development company
MicroStrategy, founded by bitcoin maximalist Michael Saylor, recently purchased 850 bitcoin for $37.2 million, bringing the company's total holdings to a staggering 190,000 bitcoin valued at over $8 billion. Additionally, the financial results for the fourth quarter were announced, with Saylor addressing questions about their bitcoin strategy and business outlook.
In their statement, MicroStrategy dubbed themselves as 'the world’s first bitcoin development company', dedicated to the ongoing development of the bitcoin network through activities in financial markets, advocacy, and technological innovation.
While the price of bitcoin has remained relatively stable, MicroStrategy's stocks have dropped by 22% this year since the launch of bitcoin ETFs. To reassure investors, the company explained that investing in MicroStrategy stocks is superior to bitcoin ETFs.
One of the arguments is that investors in MicroStrategy have active control over the capital structure, and the company has the ability to innovate, unlike ETFs that simply hold bitcoin. Additionally, MicroStrategy highlighted other benefits, such as the difference in management fees and the ability to tap into capital markets to attract attractive debt financing.
Bitcoin mining in overdrive
Bitcoin mining continues to be a topic of intense interest, with the hashrate currently standing at 551 EH/s and the difficulty level at 75.5T. It's a highly competitive market where achieving profitability appears to be a challenge.
Nevertheless, publicly traded miners such as Marathon Digital Holdings, Riot Platforms, and CleanSpark continue to grow.
In January, Marathon Digital Holdings impressively increased its hashrate by 7% to 26.4 EH/s. Despite facing obstacles such as weather-related setbacks and equipment failures, the company managed to mine 1,084 bitcoin, albeit 42% less than in December.
Riot Platforms also had a successful month in January, mining 520 bitcoin. During the extreme cold weather in Texas, efforts in energy conservation helped stabilize the electricity grid, resulting in the generation of $3.3 million in energy credits.
Currently, Riot is in the process of developing phase 1 of its second large-scale mining facility, the Corsicana facility, which is expected to add an additional capacity of 400 megawatts.
Bitcoin mining company CleanSpark recently announced its acquisition of three turnkey bitcoin mining facilities in Mississippi for $19.8 million. The purchase is expected to be completed within 21 days, with the operational hashrate of the combined facilities projected to reach 2.4 EH/s. The miners seem to be gearing up for the upcoming bitcoin halving.