Crypto Miners Are Adopting MicroStrategy’s Bitcoin (BTC) Buying Strategy: JPMorgan

MicroStrategy (MSTR), the software program firm based by Michael Saylor, is not the one large-scale company purchaser of bitcoin (BTC), JPMorgan (JPM) mentioned in a report Wednesday. Crypto miners additionally make use of the buildup technique.

The shift towards constructing bitcoin possession is pushed by rising stress on profitability, which comes from April’s reward halving and a rising community hashrate, the report mentioned. Hashrate is the whole computing energy used to mine and course of transactions on a proof-of-work blockchain and is a measure of business competitors and mining challenges.

“This has seemingly prompted miners to hoard additional investments in bitcoin or diversify into AI/HPC firms,” wrote analysts led by Nikolaos Panigirtzoglou, referring to synthetic intelligence and high-performance computing.

In response to those challenges, miners similar to MARA Holdings (MARA) have adopted an identical bitcoin shopping for technique as MicroStrategy, known as BTC yield, in accordance with JPMorgan.

MARA now owns 35,000 tokens ($3.5 billion) and is the second-largest publicly traded firm when it comes to bitcoin holdings.

The miners are usually not alone. Medical system producer Semler Scientific has additionally been actively buying the world’s largest cryptocurrency and now owns $144 million value of crypto.

The introduction in January of spot bitcoin exchange-traded funds (ETFs) within the US has given institutional traders a extra direct option to achieve publicity to bitcoin, the financial institution mentioned. Miner shares, which have been handled as a proxy for bitcoin, have underperformed in consequence.

The financial institution famous that, along with shopping for extra bitcoin, miners are more and more financing their companies by debt and fairness choices quite than promoting their crypto reserves to cowl working prices.

Miners have raised greater than $10 billion in fairness capital to date this yr, surpassing the earlier excessive of $9.5 billion in 2021, the report mentioned.

Learn extra: Bitcoin Miners Cipher, CleanSpark and MARA Upgraded at JPMorgan