- The launch of the first US Bitcoin ETF could divert capital away from mining stocks, even though mining stocks have outperformed Bitcoin this year by acting as leverage plays.
- Mining stocks may see reduced demand as investors switch to a direct Bitcoin ETF instead of using miners as a proxy.
- However, miners remain confident in Bitcoin’s long-term prospects, expecting continued price appreciation and more investors from the ETF.
The upcoming launch of the first US spot Bitcoin exchange-traded fund (ETF) has generated excitement within the crypto industry. While Bitcoin miners also seem optimistic, the ETF could divert capital away from mining stocks.
Mining Stocks Have Outperformed Bitcoin
Public mining stocks have averaged even stronger returns than Bitcoin this year. These regulated companies have acted as leverage plays on BTC in the absence of an ETF. For example, Grayscale Bitcoin Trust shares are up 196% in 2021.
ETFs May Draw Investors Away from Miners
Though promising for Bitcoin, ETFs may reduce demand for mining stocks that investors currently treat as the next best thing. Mining revenue stems from Bitcoin rewards, so a rising BTC price boosts miners. However, investors may now prefer a direct Bitcoin ETF over mining proxies.
Miners Remain Bullish on Bitcoin’s Prospects
Miners like CleanSpark and Iris Energy have invested heavily in equipment ahead of the upcoming halving. They expect continued Bitcoin price appreciation. An ETF may also open the asset class to more investors. But it could produce counterintuitive effects for miners if investors switch from stocks.
Retail Investors May Prefer an ETF’s Simplicity
Many retail investors are uncomfortable buying coins directly from crypto platforms. An ETF provides a regulated way to gain exposure. After the high-fee Grayscale fund, options like Coinbase and futures ETFs have downsides compared to a spot ETF.
While the first Bitcoin ETF should boost Bitcoin, it creates uncertainty for related mining stocks. Investors may abandon these proxies when offered a superior product. However, miners remain confident in Bitcoin’s long-term trajectory.