Bitcoin Miners Surge: Catching Up to AI/HPC Stocks?

Bitcoin Miners Outperform After Data Center Focus

Pure-play Bitcoin mining stocks are showing renewed strength after previously underperforming companies that diversified into the data center sector.

Companies like MARA Holdings (MARA) and CleanSpark (CLSK) saw significant gains on Thursday, rising 10% and 17% respectively. This performance led gains among members of the CoinShares Bitcoin Mining ETF.

Key Factors Driving the Surge

Two primary factors appear to be behind this recent uptrend:

Anticipation of a Strong Year-End for Bitcoin

Investors may be anticipating a historically bullish year-end for Bitcoin. BTC is nearing $118,000 following recent indications of potential Federal Reserve interest rate cuts, up 2.2% on Thursday and trading approximately 5% below its all-time high.

Miners with substantial BTC holdings could benefit significantly from a Bitcoin rally. MARA and CleanSpark hold substantial amounts of BTC, with 52,477 BTC ($6.2 billion) and 12,703 BTC ($1.5 billion) respectively. Similarly, MicroStrategy (MSTR), the largest corporate holder of Bitcoin, also saw a 7% increase.

Profit Rotation from HPC and AI Stocks

The second factor is the possibility of investors shifting profits from high-performance computing (HPC) and artificial intelligence (AI) stocks, which have experienced substantial gains in recent months.

While companies like Iren Energy (IREN), Cipher Mining (CIFR), and Bitfarms (BITF) have seen significant growth (Bitfarms up 150% in September, IREN up over 600% since April, and CIFR up 500% during the same period), there are signs of a potential shift. CIFR was down 7% and IREN slipped 4% on Thursday, supporting the profit rotation theory.