Crypto mining companies are experiencing a stock market boom, driven by their strategic pivot from Bitcoin mining to artificial intelligence (AI) data center operations. Despite Bitcoin's price weakness, trading below $70,000 and under pressure from miner outflows, shares of leading firms like Iris Energy (IREN) have rallied. The narrative is that these companies are undervalued, with their legacy BTC treasuries—acquired at lower mining costs—financing expansion into high-compute AI infrastructure and securing electricity for new data centers.
This shift is leading to significant Bitcoin sales from miner reserves. Reports indicate Cango sold 4,451 BTC, retaining 3,645 BTC, in a move aimed at boosting its balance sheet with approximately $305 million dedicated to capital expenses. While unconfirmed by official Cango leadership, this sale contributes to a broader trend of miner outflows. Total miner reserves have dropped to 1.8 million BTC from 1.89 million in recent months, with Marathon Digital (MARA) also identified as a potential source of selling pressure.
The sales are occurring in a challenging profitability environment. Bitcoin is trading near $65,900, which is below the estimated production cost for many miners, squeezing margins. However, this capitulation is not solely due to BTC price weakness. The primary driver appears to be strategic demand for capital to fund the AI pivot and potentially cover debt from building new data centers. The network hashrate has recovered to 963 EH/s, indicating that established mining operations remain profitable enough to continue.
Market analysts, including BitMEX co-founder Arthur Hayes, note that "the ongoing miner outflows underscore the pressure on Bitcoin’s price as ETF withdrawals compound the issue." The combination of miner selling and significant Bitcoin ETF outflows creates a volatile backdrop, though the mining sector shows resilience through its diversification into AI.
