Crypto-mining stocks were buoyed over the summer by developments that seemed to suggest that the crypto sector would be legitimized, but those hopes have been slow to materialize.

Riot Platforms, the largest mining stock by market capitalization, fell 11% in value to $9.26 on September 25 from its summer peak of $20.29 on July 13. Marathon Digital Holdings similarly dropped by 52%, joined by similar dives in the value of smaller mining stocks like Hut 8 and Hive Digital Technologies. After outperforming the NASDAQ Composite index for much of the summer, mining stocks are now lagging the index

Yet in the face of these declines, investors remain bullish on the hopes that federal regulators will eventually grant approvals for a series of exchange-traded funds in Bitcoin spot markets. If Bitcoin’s value rises as expected with these ETFs, miners will enjoy an immediate benefit, said Joseph Vafi, the managing director for equity research at Canaccord Genuity.

“Miners’ stocks are at least 100% correlated to the price of Bitcoin,” said Vafi. “If Bitcoin goes up 10%, generally miners go up more, and the same is true on the downside.” 

This trend has played out in the last decade of Bitcoin’s rises and falls. During the crypto bull run that peaked in November 2021, Bitcoin reached its highest recorded price of just over $67,000, bringing miners’ stocks to double-digit values, with Marathon’s reaching almost $76 and Riot hovering around $45. 

These peaks disappeared with the cascade of industry failures in 2022, from the demise of stablecoin issuer TerraLuna to the implosion of cryptocurrency exchange FTX. All of this took place amid a general retreat from riskier assets that came with rising interest rates. However, investor interest reignited over the summer after BlackRock filed an application for a spot Bitcoin ETF, sparking a parade of applications from other Wall Street heavyweights. 


The Securities and Exchange Commission has resisted approving any applications for a spot Bitcoin ETF since first receiving one in 2013, but there is plenty of hope that this may change with the recent filings. A recent court victory by digital-asset manager Grayscale saw the SEC’s arguments against Grayscale converting its Bitcoin trust into a spot ETF thrown out, which has added more optimism for an ETF. 

This sense of momentum towards approval has left mining investors like StockTwits user Dan “100% bullish” about Bitcoin and the options he holds in miners once an ETF is approved.  

“I think it's going to happen,” said Dan of an ETF approval. “Too many people are underestimating the inflow of funds into Bitcoin after it is approved.”

At the same time, there remain some strong headwinds blowing in Bitcoin and miners’ direction. 

The most obvious challenge remains regulatory uncertainty. For the last year, the SEC has frustrated the crypto industry for its refusal to clearly articulate its arguments against a spot ETF. The agency maintains that Bitcoin spot markets are prone to manipulation, creating dangers for investors, but this line has been undercut by its approval of futures-based Bitcoin products that rely on spot pricing. 

For all of the glee felt with the Grayscale ruling that it left the door open to an ETF’s approval, it also left the SEC a second chance to “find other grounds for denying Grayscale’s application once again," said Mike Colonnese, a senior crypto and blockchain analyst with H.C. Wainwright & Co., in a note to clients on September 6.

Another wrinkle could be rising energy prices after Saudi Arabia and Russia announced oil production cuts that will last through the year. The impact of this has already been registered in August’s Consumer Price Index report, which showed inflation rising to 3.7%, driven mainly by higher energy costs. 

Typically, energy prices are one of the main factors influencing a miner’s stock price alongside Bitcoin’s value, said Owen Lau, a senior analyst and executive director in equity research at Oppenheimer & Co. Often Bitcoin’s price is the prevailing concern for mining investors, and a sense that its price may be going up in the near-future with new ETFs arriving could be enough to overlook higher energy prices. 

"I think in the near-term people may focus on this factor, but that doesn't mean we should totally ignore the energy factor," said Lau. Instead, he said any impact from these costs will "come down to how many people actually pay attention" to them.

For investors like Dan, there are more tailwinds than headwinds in the current moment that suggest Bitcoin will rise with his mining stocks, especially if the SEC begins making decisions on ETFs in October as expected. 

“I’m not really concerned with the higher energy prices,” said Dan. “I see too many other positive catalysts ahead that should offset any negative ones.”