Bitcoin Mining Stocks Plunge 30% Amid Price Drop, Hashrate Surge

Bitcoin mining stocks have experienced a significant decline at the start of 2025. Companies such as Bitdeer, Cipher Mining, and Hut 8 have lost over 30% of their value due to the decrease in Bitcoin prices and an 80% surge in network hashrate, which has narrowed profit margins and shaken investor confidence. Additionally, delays in expanding other revenue streams such as high-performance computing (HPC) have led many to turn to hashrate derivatives for financial stability. But how exactly do these derivatives function?

Bitcoin miners have faced a major storm in the early months of 2025. As Bitcoin prices plummeted, mining stocks followed suit. Within a few weeks, many major companies reported losses of hundreds of millions of dollars, severely eroding investor confidence. Despite efforts to upgrade machinery and expand operations, the rapid increase in network hashrate has made maintaining profitability extremely challenging.

Hashrate in Bitcoin mining refers to the computational power used by ASIC machines to process transactions and secure the network. It measures the number of hashes that a miner or network can perform per second, typically calculated in terahashes per second (TH/s) or exahashes per second (EH/s). A higher hashrate increases the chances of mining Bitcoin but also intensifies competition and energy consumption. Currently, the surge in network hashrate has significantly impacted miners' profits.

One of the primary reasons for the decline in mining stocks is the 80% increase in network hashrate, making it harder than ever to maintain revenue. The cost of securing Bitcoin rewards has risen, squeezing profits even for the largest companies. Many firms have attempted to reduce electricity costs or find new revenue sources, but these efforts have not been enough to reassure investors. Furthermore, delays in high-performance computing (HPC) contracts have dampened interest in the sector. Combined with macroeconomic instability and legal risks, mining stocks have underperformed compared to Bitcoin itself.

If mining stocks are too risky, why not consider hashrate derivatives? These financial instruments allow investors to bet on mining efficiency without owning mining equipment. Two popular types include:

Hashrate Futures: These contracts lock in future profits, protecting against Bitcoin price volatility and mining difficulty.

Hashrate Swaps: These are flexible agreements between two parties that stabilize income by transferring risk to a third party.

Additionally, there is Blockstream’s Mining Note (BMN), a tokenized hashrate contract. Each BMN represents a fixed amount of hashrate from Blockstream’s professional mining farms. Investors receive Bitcoin directly from mining activities without worrying about equipment or operations. This convenience is unmatched.

BMN has proven to be a standout in the crypto investment landscape. Over three years, it has generated over 1,200 BTC for investors, with a return rate of approximately 103%, outperforming both Bitcoin prices and traditional mining stocks. Moreover, BMN can be traded on secondary exchanges like Bitfinex Securities, ensuring high liquidity.

The greatest advantage of BMN is that it allows investors to avoid the risks associated with managing mining equipment and stock market volatility. By simply investing in the token, one can easily participate in Bitcoin’s proof-of-work ecosystem.

In summary, while Bitcoin mining stocks are attractive, they come with significant risks, especially during volatile periods. Hashrate derivatives, particularly Blockstream’s BMN, are emerging as a smart alternative. With their flexibility, lower risk, and stable returns, they are a worthy consideration for those looking to invest in Bitcoin mining without the hassles of managing hardware or market fluctuations.