Why a Bitcoin Spot ETF is Making Mining Firms Nervous

Bitcoin ETF vs Mining Stocks

There is growing hope that a Bitcoin spot ETF will soon hit the US market. Most crypto enthusiasts have already started discussing how this type of Exchange-Traded Fund will boost Bitcoin’s price and fuel mainstream crypto adoption.

For starters, an ETF can be described as an investment product that gives investors exposure to cryptocurrencies without holding any of the digital assets. For years, Mining stocks have been serving this role, but it appears that the approval of a Bitcoin ETF may prompt stock investors to shift to the new product. This has raised concerns among mining companies.

Mining stocks, which tend to follow Bitcoin’s price direction, have seen massive gains this year, with most of them surging 150% or more. By comparison, Bitcoin is up 125% in 2023. While miners acknowledge that a Bitcoin ETF is good for the crypto industry as it has the potential to drive institutional adoption, they are afraid that it may take away the capital from stocks.

“We Are Focused on BTC’s Price,” CleanSpark Communications Head Says

But Issac Holyoak, the Chief Communications Officer at mining firm CleanSpark, has chosen to remain positive, focusing only on the BTC’s price and how it could boost the firm’s revenue. He highlights recent developments around an ETF, like rumors that the SEC had approved BlackRock’s filling, which caused Bitcoin to rally massively.

If BTC’s price continues to rise, mining firms like CleanSpark will see their revenue surge due to the increase in value of their block rewards. In anticipation of higher Bitcoin prices in the future, CleanSpark has spent millions of dollars to buy mining machines. A few months ago, the miner purchased two mining facilities for a combined cost of $9.2 million to increase its production capacity.

CLSK’s performance This Year

In October, after the monthly mining industry report was released, Reginald Smith, an equity analyst at banking giant JP Morgan, called CleanSpark’s stock CLSK overweight, meaning it had the power to outperform other stocks. He attributed CLSK’s expected tremendous performance to CleanSpark’s move to buy mining facilities and hardware at what he called “deeply discounted prices.” Data from NASDAQ shows that CLSK is up 141% this year.