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Corporate Buyers of Bitcoin: Miners and JPMorgan
According to a recent report by JPMorgan, MicroStrategy, the software company founded by Michael Saylor, is not the only large-scale corporate buyer of bitcoin (BTC). Crypto miners are also adopting the accumulation strategy.
Increasing Pressure to Profitability
The shift to building up bitcoin holdings is driven by growing pressure on profitability, which stems from the reward halving in April and a rising network hashrate. Hashrate is the total computational power used to mine and process transactions on a proof-of-work blockchain and is a proxy for competition in the industry and mining difficulty.
Miners’ Response: Hoarding or Diversifying
“This likely prompted miners to hoard or seek further investments into bitcoin or diversify into AI/HPC businesses,” analysts led by Nikolaos Panigirtzoglou wrote, referring to artificial intelligence and high-performance computing.
Miners’ Strategies
Miners such as MARA Holdings (MARA) have adopted a similar bitcoin-buying strategy to MicroStrategy, called BTC yield, in response to these challenges. MARA now owns 35,000 tokens ($3.5 billion) and is the second-largest publicly listed corporation in terms of bitcoin holdings.
Other Corporate Buyers
The miners aren’t alone. Medical-device maker Semler Scientific has also been actively buying the world’s largest cryptocurrency, and now owns $144 million worth of crypto.
Institutional Investors and ETFs
January’s introduction of spot bitcoin exchange-traded funds (ETFs) in the U.S. has given institutional investors a more direct way to gain bitcoin exposure, the bank said. Shares of miners, which had been treated as a proxy for bitcoin, have underperformed as a result.
Miners’ Financing Strategies
The bank noted that aside from buying more bitcoin, miners are increasingly financing their businesses via debt and equity offerings rather than selling their crypto reserves to cover operational costs.
Miners’ Fundraising Efforts
Miners have raised more than $10 billion in equity so far this year, eclipsing the previous high of $9.5 billion in 2021, the report added.
Conclusion
In conclusion, corporate buyers of bitcoin, including miners and JPMorgan, are adopting strategies to accumulate and diversify their holdings in the largest cryptocurrency. The increasing pressure on profitability is driving this trend, as well as the introduction of spot bitcoin ETFs in the U.S. and the shift towards debt and equity financing.
FAQs
Q: What is the purpose of the JPMorgan report?
A: The report provides insights into the strategies of corporate buyers of bitcoin, including miners and JPMorgan.
Q: What is driving the accumulation of bitcoin by miners?
A: The pressure to profitability, stemming from the reward halving and rising network hashrate.
Q: What is the significance of the introduction of spot bitcoin ETFs in the U.S.?
A: It has given institutional investors a more direct way to gain bitcoin exposure, leading to underperformance in shares of miners.
Q: How are miners financing their businesses?
A: Miners are increasingly financing their businesses via debt and equity offerings rather than selling their crypto reserves to cover operational costs.
