Mining Stocks Dip Amidst Bitcoin's Surge
Bitcoin has just crossed $91,000, but the euphoria is not spreading to all market segments. Mining company stocks fell 1.8 % over the week, while trading volumes dropped 25 %. This decline reflects less a simple technical pause than a deeper malaise in a sector weakened by rising production costs.
The 1.8 % decline in Bitcoin mining stocks recorded this week is not just a temporary pullback.
It is accompanied by a liquidity collapse. The trading volume dropped from $413,500 to $307,350, a 25.66 % decrease in a few days. Out of the 34 listed mining companies, 25 ended the week in the red.
Among the top ten companies in the sector, only two avoided the decline: Applied Digital Corporation (APLD) and Core Scientific, Inc. (CORZ), which rose 15.20 % and 1.30 %, respectively. On the other hand, American Bitcoin Corp. (ABTC), co-founded by Eric Trump, suffered the heaviest correction: -47.40 % in five days. The stock fell from $5.75 to $2.23, a dizzying drop caused by the unlocking of private shares held by initial investors.
In a post on X (formerly Twitter), Eric Trump explained this volatility: "Today, the shares from our private placement before the merger were unlocked; these initial investors can now freely cash out their gains for the first time, which explains why we will see volatility."
ABTC’s IPO in September, via a reverse merger with Gryphon Digital, also contributes to the stock’s extreme volatility by attracting speculators more inclined to short-term movements.
However, this particular dynamic should not overshadow a general trend: the total market capitalization of mining companies fell from $69.12 billion on November 28 to $67.89 billion on December 5. The week’s key facts are clear:
- •-1.8 % : the overall weekly performance of BTC mining stocks ;
- •-25.66 % : the drop in trading volume over five days ;
- •Only 6 out of 34 stocks finished in the green ;
- •ABTC (American Bitcoin Corp.) : the largest drop at -47.40 % ;
- •Eric Trump mentions a direct effect of unlocking private shares ;
- •APLD and CORZ are the only major caps to rise ;
- •A $1.23 billion drop in sector capitalization in one week.
Despite BTC above $91,000, the market seems to question the viability or short-term profitability of some mining companies, especially those strongly dependent on the traditional production model.
Profitability Pressures and the Strategic Shift to AI
Beyond immediate stock fluctuations, it is the business model of Bitcoin mining itself that appears under pressure.
Indeed, the average cash cost to produce a single BTC now reaches $74,600 for publicly traded mining companies. Including depreciation and stock-based compensation (SBC), the total cost rises to $137,800. These levels severely erode operational profitability, even with Bitcoin around $91,000.
This tension is exacerbated by a continuous increase in hashrate, which has surpassed the symbolic threshold of 1 zettahash/second (ZH/s). Intensifying competition is pushing more mining companies to explore growth avenues outside Bitcoin.
Faced with this pressure, some mining companies are initiating strategic diversification into more lucrative adjacent sectors. A prominent example is Applied Digital, which invested $25 million in Corintis, a Swiss company specializing in cooling solutions for chips dedicated to artificial intelligence.
The goal is thus to develop high-performance data centers for AI and High Performance Computing (HPC), segments known for offering better margins than crypto mining.
The decline in mining stocks highlights growing sector tensions. To preserve margins, companies in the sector are turning to AI, betting on strategic diversification. It remains to be seen whether this transition will be enough to offset a business model weakened by market volatility and rising costs.