According to the latest report from JPMorgan, the miners are reportedly adopting the same strategy on Bitcoin implemented by MicroStrategy in recent years.
The bank observed that the miners are financing their activities by issuing bonds and stock offerings, without using their own reserves in Bitcoin.
All this is highly bullish for Bitcoin, which reduces its potential selling pressure while simultaneously increasing demand in the market.
All the details below.
MicroStrategy and the relentless accumulation of Bitcoin with the BTC yield strategy
As indicated by JPMorgan, the miners would have started accumulating Bitcoin thanks to a “BTC yield” approach, the same adopted as a standard by MicroStrategy.
We talk about a strategy that aims to maximize the value of a company’s shares through the relentless purchase of the main cryptocurrency in the crypto market.
Technically, BTC yield is a key performance indicator (KPI) that measures the rate of change of Bitcoin per share, that is, how many BTC the company is able to obtain for each share outstanding.
MicroStrategy, under the guidance of CEO Michael Saylor, is trying to increase the “BTC per shares” ratio solely using its internal resources.
In practice, the business intelligence company covers the costs of accumulation using its cash reserves and raising money from investors with private offerings.
The advantages of this tactic are numerous, such as the diversification of the investment portfolio, an increase in protection against inflation, and the appreciation of one’s shares.
Thanks to this approach, MicroStrategy has managed to accumulate over 423,650 Bitcoin in just 4 years for a total value of approximately 25.6 billion dollars.
The company’s investment is now in an unrealized profit of 18.8 billion dollars while the value of MSTR shares has risen by 500% since the beginning of the year.
In parallel, MicroStrategy has brought its BTC yield to a quarterly rate of 38.7% and an annual rate of 63.3%, much more than what was set in January 2024.
A higher BTC Yield means that each MicroStrategy share becomes more valuable as the amount of accumulated Bitcoin increases.
Source: https://www.mstr-tracker.com/
The miners renew the success of the MicroStrategy method
As observed by the New York bank JPMorgan, Bitcoin miners are following in the footsteps of MicroStrategy.
Instead of liquidating their reserves in BTC to cover production costs, North American crypto mining companies are using alternative methods.
For example, Mara Holdings recently announced an offering of senior convertible shares, raising 850 million dollars.
This mining company has issued bonds (irregular interest) maturing on March 1, 2030, with investors able to convert them into cash and/or azioni.
The money was partly used to purchase Bitcoin on the market, bringing the total of its holdings to 35,000 BTC, valued at approximately 3.5 billion dollars.
The use of this “BTC yield” tactic has allowed Mara to become the second public holder of the orange cryptocurrency after MicroStrategy itself.
According to JPMorgan, the shift to accumulating stakes in bitcoin is driven by the growing pressure on the profitability of miners.
After the last halving of the block reward in April and the increase in the Total Hashrate, miners had to find new incentives to stay afloat.
Furthermore, the shares of mining companies have become less appealing in the market as institutional investors have gained direct access to Bitcoin through spot ETFs. As a result, in 2024, the shares of Bitcoin miners, which were previously considered a proxy for Bitcoin, underperformed the benchmark.
Obviously, all this provides a bullish stimulus to the currency, which sees a reduction in part of the potential selling pressure from the extraction workers.
At the same time, the demand in the crypto market increases, driven by the accumulation resulting from the MicroStrategy method.
Diversification and new investments for the miners
JPMorgan notes that the miners, in addition to copying MicroStrategy’s Bitcoin-focused strategy, have strongly diversified their investments.
The bank led by CEO Jamie Dimon noted that the new market challenges have driven miners to strongly focus on the artificial intelligence sector and high-performance computing. As the group’s analysts literally wrote:
“This has likely pushed the miners to accumulate or seek further investments in bitcoin or to diversify into artificial intelligence/HPC activities”.
This diversification is motivated by the need to find new sources of income and improve corporate sustainability.
For example, Core Scientific has signed a 12-year contract for hosting AI services, demonstrating the growing interest in these technologies.
The same company has actively purchased Bitcoin, increasing the value of its holdings to 144 million dollars.
This strategic change allows miners to better leverage their energy resources and reduce their exclusive reliance on mining.
JPMorgan has noted that the miners have raised more than 10 billion dollars in equity capital this year, surpassing the previous record of 9.5 billion recorded in 2021.
These funds are used to invest in advanced infrastructure, such as state-of-the-art data centers and GPUs, necessary to support AI and HPC operations.
