Michael Saylor made another sale. But this time, it was huge. On July 6, Saylor's Bitcoin hoarding giant Strategy (NASDAQ: MSTR) revealed the sale of about 3,588 BTC for $216 million between
Michael Saylor made another sale. But this time, it was huge.
On July 6, Saylor's Bitcoin hoarding giant Strategy (NASDAQ: MSTR) revealed the sale of about 3,588 BTC for $216 million between June 29 and July 5. The sale proceeds went to fund distributions on its preferred stock STRC and to replenish its USD Reserve.
For a company that stayed glued to its "never sell Bitcoin" motto for the longest time, this is the second time the company is opting to dump from its stash.
However, the move seemed to trigger a different price movement for Bitcoin miners.
Related: Michael Saylor reveals why Strategy sold Bitcoin and why critics are wrong
Bitcoin mining is the process where computers solve complex cryptographic puzzles to validate transactions and add them to Bitcoin's blockchain. Miners compete using specialized hardware, and the winners earn newly created Bitcoin plus transaction fees as rewards.
This process, called "proof-of-work," secures the network, prevents fraud like double-spending, and controls the rate at which new Bitcoin enters circulation.
On July 6, popular Bitcoin mining stocks showed a surge in intraday activity.
As of press time, IREN (NASDAQ: IREN) was up by 13.4% and trading near $44 while TeraWulf (NASDAQ: WULF) was trading near $23.5, up by 11%.
Cipher Digital (NASDAQ: CIFR) was up 10.83% and trading near $22.2 while HIVE Digital (NASDAQ: HIVE) posted a 5.40% jump to trade near $3.41.
It is important to note that these companies are not pure-play miners anymore, thanks to the falling profit margins.
Over the past year or so, these companies have started pivoting toward AI.
In fact, TeraWulf's jump on July 6 was mostly due to its new 20-year lease it signed with Anthropic for a purpose-built AI infrastructure campus at the Justified Data site in Hawesville, Kentucky.
The lease is expected to bring in approximately $19 billion of contracted lease revenue over the initial term.
HIVE, IREN and Cipher Digital are also making significant strides by signing partnerships with big names in AI. For example, IREN has a strategic partnership with both Nvidia (NASDAQ: NVDA) and Microsoft (NASDAQ: MSFT). Cipher Digital has a 15-year lease partnership with Amazon Web Services.
Only HIVE is following a dual-engine model. HIVE continues to mine Bitcoin and uses the cash flows and infrastructure from Bitcoin mining to build higher-value AI and HPC businesses on top.
Trending on TheStreet RoundtableFor years, Strategy enjoyed a certain kind of privilege of being a proxy for Bitcoin.
But there seems to be a shift in investor confidence after Strategy's repeated sales. Investors seem to be looking elsewhere for better proxies of Bitcoin. And what can be better than Bitcoin mining stocks?
In fact, last month, one of the biggest critics of Bitcoin and a veteran gold bull, Peter Schiff, criticized Strategy's Bitcoin moves as detrimental to the shareholders.
"Even if you are bullish on Bitcoin, owning MSTR is the worst way to make that bet."
Reddit has been divided after Strategy's sale of Bitcoin. While many have questioned the timing, a few feel it was right move.
In r/MSTR, a redditor by the name xaviemb, who is also a shareholder of MSTR stocks, said that the move was aligned with what the market wants to perceive.
"If preserving cash on the balance sheet and funding obligations from a modest BTC sale gives investors greater confidence in the resilience of the structure, that's a rational tradeoff."
As for stocks like IREN and TeraWulf, Redditors are fairly confident about their ongoing pivots to AI.
Related: Could AI and Bitcoin mining mitigate the looming energy shortage?
Bernstein said in a July 6 note that Strategy's accumulation has offset selling from leading U.S. bitcoin miners, which are redirecting toward AI data centers. The firm expects the largest U.S.-listed miners to abandon Bitcoin mining entirely, with their hash rate share absorbed by international operators across Southeast Asia, Central Asia, and Latin America.
Bitcoin's hash rate, the total computing power miners use to process transactions on the network, has fallen about 11% year-to-date on average, Bernstein's analysts wrote.
U.S. miners' share of total network hash rate has slipped more than 40 basis points over the past two quarters, while emerging-market miners have picked up roughly 100 basis points.
Bitcoin mining hashrate vs priceBlockchain.com
As seen on the graph above, Bitcoin hash rate rose in tandem with its price through most of this cycle. But it has recently turned volatile and declined as price fell below the miners' estimated breakeven cost.
This is a sign that margins to mine Bitcoin have compressed, pushing higher-cost miners offline rather than hash rate continuing to climb. At press time, Bitcoin's hash rate stood at 933.56 EH/s.
According to JPMorgan quants, the beta of mining difficulty to Bitcoin prices has grown over the past six months, as a higher share of miners operate near their breakeven zone. This makes the hash rate more sensitive to price swings.
JPMorgan expects this heightened sensitivity, along with more frequent large difficulty adjustments, to persist as long as bitcoin stays below that threshold.
At press time, Bitcoin traded near $63,586 while JPMorgan estimates the cost of mining one Bitcoin at $78,000.
Related: Bitcoin mining stocks in focus as strategic focus shifts toward AI
