Major Changes in the Encryption Industry: Bitcoin Mining Companies Shift to Ethereum

The digital asset sector is undergoing a significant transformation. Recently, a well-known publicly listed Bitcoin mining company announced a shocking strategic adjustment to the market: through a $150 million public offering, the company will gradually exit the Bitcoin mining business and fully transition to Ethereum staking and fund operations. This massive amount of funding will be entirely used to purchase Ether (ETH), making it one of the companies with the largest financial commitment to ETH in the public market.

This bold move is not a simple business adjustment, but a courageous "gamble." The company plans to gradually sell or close its Bitcoin mining operations and convert its held Bitcoin assets into Ether. As of the end of March 2025, the company holds approximately 24,434 Ether and 418 Bitcoins, laying the foundation for its future "Ethereum purism" strategy.

This shift has sparked deep reflection within the industry: has the "wind direction" of the encryption world truly changed? Once regarded as "digital gold," Bitcoin and its mining operations were once the hottest goldmine in the digital asset space. However, with the emergence of a series of challenges and the increasing maturity of the Ethereum ecosystem, the company's strategic pivot may signal a profound structural change in the industry.

To understand this decision, we need to examine the macro background of the cryptocurrency market in 2024-2025. Although the price of Bitcoin broke through the $100,000 mark in early 2025, the Bitcoin mining industry faces unprecedented structural challenges. The Bitcoin "halving" event in April 2024 directly led to the block reward for miners plummeting from 6.25 BTC to 3.125 BTC. At the same time, mining difficulty continued to soar, with the hash rate rising rather than falling, reaching 831 EH/s by May 1, 2025. Revenue from transaction fees saw a significant decline, with hash prices plummeting from $0.12 in April 2024 to about $0.049 in April 2025. High energy costs and the ongoing demand for equipment upgrades have severely squeezed the profit margins of many mining companies.

In contrast, Ethereum successfully transitioned from a Proof of Work (PoW) mechanism to a Proof of Stake (PoS) mechanism after completing "The Merge" in 2022. This change reduced its energy consumption by 99.95%, making it a more sustainable and environmentally friendly option, thereby attracting institutional investors seeking stable returns and reduced operating costs.

Strategic Shift of 150 Million USD

The company successfully raised $150 million by issuing 75 million shares of common stock at a price of $2 per share. The underwriters also have a 30-day over-allotment option to purchase an additional 11.25 million shares. This fundraising has caused significant equity dilution for existing shareholders: prior to the issuance (as of September 2024), the company had 128.05 million shares outstanding, and the newly issued 75 million shares represent an increase of 58.5% in the total shares, resulting in nearly 37% dilution of existing shareholders' equity.

It is worth noting that the funds raised this time will be "exclusively used to purchase Ethereum", rather than for operational growth or debt reduction. This means that the company will be "100% exposed to Ethereum price fluctuations" after its strategic transformation, and its financial health and stock performance will be directly linked to the valuation of ETH. Such a large-scale equity dilution, along with the singular use of funds, indicates that the company's management has extremely high confidence in the future performance of Ethereum.

The company's determination to transform is also reflected in its comprehensive asset conversion plan. It plans to gradually convert the 417.6 Bitcoins (worth approximately $34.5 million) held as of March 31, 2025, into Ether, and to sell or liquidate its global Bitcoin mining operations, including facilities in the United States, Canada, and Iceland, with the net proceeds to be reinvested into ETH. This means that the company will become a "pure Ethereum staking and fund management company."

Saying Goodbye to Bitcoin Mining: Why Choose "Decluttering"?

The company's choice to completely say goodbye to Bitcoin mining is a rational response to the deep-seated dilemmas in the industry. After the Bitcoin halving in 2024, mining profitability has tightened significantly, with the company only mining 83.3 Bitcoins in the first quarter of 2025, a year-on-year decrease of 80%. The "high energy consumption" and "capital-intensive" characteristics of Bitcoin mining have made it unsustainable under market fluctuations and halving shocks.

Mining requires continuous investment in new hardware and faces rising operating costs, while Ethereum staking "relies on cheaper machines and lower energy consumption," significantly reducing operating costs and environmental footprint. For example, the energy consumption of the Ethereum PoS system is 99.95% lower than that of PoW, with its energy consumption level comparable to that of a small town rather than a country.

The company's transformation is not only a response to financial pressure but also aligns with the macro trend of the encryption industry shifting from "energy-consuming" PoW to "capital-efficient" PoS, aiming to achieve the dual goals of "growth and sustainability." This shift reflects the evolution of values within the encryption industry: in the past, computational power competition was central, while now capital efficiency and environmental sustainability have become the new competitive advantages.

Ethereum Staking: The New Era of "Digital Gold Rush"?

The core of the company's strategic transformation lies in a profound understanding of the fundamental differences between Bitcoin's proof-of-work (PoW) mechanism and Ethereum's proof-of-stake (PoS) mechanism. Bitcoin's PoW mechanism is renowned for its strong security and decentralization characteristics, but at the cost of enormous energy consumption, with an annual electricity usage of 67 to 240 terawatt-hours, and an energy consumption of approximately 830 kilowatt-hours per transaction. This not only brings environmental issues but also burdens miners with high electricity costs and investments in specialized hardware.

In contrast, the PoS mechanism that Ethereum shifted to after the "merge" demonstrates astonishing energy efficiency. The PoS system eliminates energy-intensive computing demands by having validators stake tokens to participate in network security and transaction verification. As a result, Ethereum's energy consumption has decreased by 99.95%, with the energy consumption for a single transaction being only 50 kilowatt-hours. This efficiency improvement makes it a more sustainable blockchain solution and significantly reduces operational costs, providing an appealing option for companies seeking stable returns and reduced expenses.

The PoS mechanism offers a more attractive profit model: stakers earn passive income by contributing to network security, similar to bank deposit interest. The annualized yield for Ethereum staking typically ranges from 4% to 7%, providing a more stable and predictable cash flow compared to the unpredictability of Bitcoin mining.

Liquid Staking Derivatives (LSDs): Unlocking a New Paradigm of Liquidity

Traditional Proof of Stake (PoS) staking has an inherent drawback: staked tokens usually need to be locked for a period of time, sacrificing asset liquidity. For example, running an Ethereum independent validator node requires staking at least 32 ETH, and this asset cannot be used for other investments or trades during the staking period.

The emergence of liquid staking derivatives (LSDs) provides an elegant solution. LSDs allow users to obtain a derivative token representing their staked assets (such as stETH for Ethereum) while staking their crypto assets. This derivative token can be freely traded or used as collateral within the decentralized finance (DeFi) ecosystem, thus maintaining liquidity while earning staking rewards. This mechanism significantly enhances capital efficiency and lowers the barrier to entry for participating in staking.

In April 2023, the "Shapella" upgrade of Ethereum activated the withdrawal function for staked ETH, further driving a surge in demand for LSDs. LSDs address the liquidity dilemma, improve capital efficiency, and lower the entry barriers for staking, significantly enhancing the attractiveness of the Ethereum ecosystem to institutional capital.

Institutional Perspective: Can Ethereum Surpass Bitcoin?

In the cryptocurrency field, the discussion about whether Ethereum can surpass Bitcoin by 2025 has always been a focal point. The CEO of a large asset management company once viewed Bitcoin as "digital gold," but also emphasized the revolutionary potential of tokenization for investments, believing that "every asset can be tokenized," which opened the door for Ethereum as a programmable platform.

An analyst from a well-known investment bank believes that Bitcoin's dominance may continue until 2025, attributed to the inflow of funds into spot Bitcoin ETFs and corporate purchase plans. Meanwhile, a founder of a tech company is known for his firm "Bitcoin First" stance. A certain asset management firm holds a positive outlook on the long-term prospects of both Bitcoin and Ether. These views reflect the different narratives institutions have regarding encryption assets: Bitcoin as a store of value, and Ethereum as a programmable platform and core of innovation ecosystem.

Conclusion: Deep Insights into the "Trends" of the Encryption Industry

The company's strategic shift is a microcosm of the "wind direction" change in the cryptocurrency industry and a courageous response to market dynamics and technological evolution. The company has resolutely exited the energy-intensive and profit-squeezed Bitcoin mining business and fully embraced Ethereum staking, while actively expanding high-performance computing and AI services. This is not only its own survival strategy but also provides an important industry demonstration effect for other digital asset companies facing similar dilemmas.

This case clearly reveals the trend of the encryption market moving from "wild growth" to "meticulous cultivation". In the past, competition for computing power and the narrative of "digital gold" dominated the market. Now, with the maturation of the Ethereum PoS mechanism, the industry's focus is shifting towards capital efficiency, environmental sustainability, and predictable returns. Financial innovations such as Liquid Staking Derivatives (LSDs) have further unlocked asset liquidity, promoting the deep integration of the DeFi ecosystem and the infinite expansion of application scenarios. This indicates that the encryption industry is transcending mere speculative attributes and developing towards greater practical value, more refined financial engineering, and broader application fields.

Looking to the future, the encryption industry will continue to focus on the resonance of efficiency, sustainability, and compliance. Technological innovation will continue to reduce energy consumption, improve transaction speed, and enhance scalability. At the same time, as regulatory agencies gradually clarify businesses such as staking, the confidence of institutional investors will further increase. The company's gamble is a concentrated reflection of these macro forces at the micro level. Its success or failure is not only related to the fate of one company but will also provide valuable experience and insights for the entire digital asset sector on how to adapt, innovate, and achieve long-term success in an evolving market.