Bitcoin miners are currently realizing that the "number go up" mantra doesn't always equate to profitability. Despite Bitcoin's prices being high by historical measures, mining profit margins have significantly narrowed. Some experts are labeling this period as the toughest margin environment ever faced by miners. This situation is prompting balance sheets to contract, leverage to be minimized, and initiatives like CleanSpark's move to settle its Bitcoin-backed loans. The pressure is also evident in public markets, with Bitcoin miners and other related trades facing severe downturns, exemplified by the sharp drop in American Bitcoin's stock.
Not all sectors within the crypto market are retreating, though. Investment is being funneled into platforms linked to cryptocurrency, as demonstrated by Kalshi's recent success in raising $1 billion, coming on the heels of a tenfold boost in trading volumes since 2024, surpassing Polymarket. Meanwhile, Ether is gaining momentum in derivatives markets, evidenced by CME Group's report that Ether futures have overtaken Bitcoin in volume, signaling increased options volatility and growing trader interest.
This week’s Crypto Biz delves into the escalating challenges for Bitcoin miners, the burgeoning Ethereum derivatives market, and Kalshi’s impressive funding achievement. The renewed volatility in the Bitcoin market has ushered miners into what TheMinerMag describes as the "harshest margin environment of all time." This is attributed to persistently low mining revenues due to declining hash prices, escalating operational expenses, and equipment payback periods now exceeding 1,000 days. In response, companies are scaling back financially, with CleanSpark opting to pay off its Bitcoin-backed credit line with Coinbase as a means to mitigate financial exposure.
Bitcoin mining stocks continue to be volatile in 2025 as they adapt to the revenue shock from the previous year’s Bitcoin halving, which halved mining rewards. Concurrently, many miners are shifting towards AI and high-performance computing tasks to secure more stable and predictable income streams beyond Bitcoin mining.
Shares of American Bitcoin, linked to Eric Trump, plummeted over 50% in a single session recently, highlighting the ongoing volatility impacting crypto-related stocks. The stock's value halved shortly after markets opened on Tuesday, extending a broader sell-off among Bitcoin mining equities and other crypto-related trades, which has intensified since Bitcoin's decline from its October peak. American Bitcoin shares have fallen over 75% from their post-listing peak of $9.31, achieved shortly after going public via a reverse merger with Gryphon Mining. This dramatic drop highlights increasing investor skepticism towards speculative crypto equities amid declining Bitcoin prices and challenging mining economics.
Kalshi has secured $1 billion at an $11-billion valuation, indicating a renewed investor interest in event-based trading. The Series E funding round, following Kalshi's record month for trading activity, was led by the crypto-focused venture firm Paradigm, with contributions from Andreessen Horowitz, Sequoia Capital, and ARK Invest. Kalshi's trading volume hit $4.54 billion in November, surpassing its previous peak, with industry data showing its trading activity has grown tenfold since 2024, overtaking competitors like Polymarket to become the leading prediction market by volume.
The CME Group has noted a significant increase in Ether futures trading, with volumes surpassing those for Bitcoin options, potentially signaling a catch-up trade or the onset of a broader Ether "super-cycle." CME executive Priyanka Jain mentioned that ETH options currently exhibit higher volatility than Bitcoin options, attracting more speculative and hedging activities. “This heightened volatility has served as a powerful magnet for traders, directly accelerating participation in CME Group’s Ether futures,” Jain remarked. “Is this Ether’s long-awaited super-cycle, or merely a catch-up trade driven by short-term volatility?” Earlier this week, the CME Group introduced a new Bitcoin Volatility Index along with additional cryptocurrency benchmarks, offering traders standardized pricing and volatility reference data.