What explains the outperformance of smaller bitcoin miners versus the cryptocurrency?

In the first half of the year, bitcoin suffered one of its steepest declines since October 2024, with the cryptocurrency falling below $60,000 on June 5. Deutsche Bank attributes the selloff to a reversal in expectations for interest rates and to capital shifting into AI and the infrastructure supporting it. Despite this, bitcoin-mining stocks ended the first half in positive territory. Below, analyst Aldiyar Anuarbekov identifies factors that could allow them to continue outperforming bitcoin.

That is contingent on the cryptocurrency’s price remaining sufficiently high. JPMorgan estimates that the average cost of mining one bitcoin was around $78,000 in June. However, miners’ costs vary: Cango spent $73,313 per coin in the second quarter, whereas American Bitcoin spent around $36,500. A fall in the bitcoin price to $70,000 would make mining unprofitable for some companies, but others with cheap electricity and efficient equipment would remain profitable.

Here are three reasons bitcoin-mining stocks could outperform the cryptocurrency.

Mining economics

Operators are shutting down outdated equipment, which benefits more efficient miners. As of September 2, the network hashrate had fallen around 28.5% to 829 EH/s (exahashes per second) from a peak of 1,160 EH/s in October 2025. Since the network still distributes around 450 BTC per day, the same computing power could theoretically generate around 40% more bitcoin. This is reflected in the hash price, or revenue per unit of computing power: according to H.C. Wainwright estimates, as of August 31 it was around 36% higher than in July, at approximately $39.40 per PH/s (petahashes per second) per day. CoinShares estimates that operators with cheap electricity and modern equipment benefit the most when outdated capacity leaves the network.

Demand and price expectations

Bitcoin gained 25% in August and rose above $81,000 on September 3 as U.S. Treasury yields declined and concerns about a Fed rate hike eased. This fueled hopes of a market recovery: Noelle Acheson, author of the "Crypto Is Macro Now" newsletter, believes the crypto winter is close to being over. Another sign of demand was the $1.9 billion that flowed into U.S. spot bitcoin ETFs in the week through August 21, according to H.C. Wainwright (whose note was seen by Oninvest).

Forecasts vary widely: H.C. Wainwright expects bitcoin to rise to $130,000 by year-end, Standard Chartered lowered its year-end target to $100,000, while Barclays assumes a price of around $64,000 in its model. A rise in bitcoin is particularly beneficial to mining stocks because it increases their revenue and margins, but that dependence also works the other way. The wide range of forecasts therefore highlights both the sector’s potential and its main risk.

Regulation and alternative uses for power sites

U.S. regulators are gradually establishing rules for the crypto market, reducing uncertainty across the industry. In August, the SEC proposed a tailored offering regime for certain investment contracts involving crypto assets, while the Commodity Futures Trading Commission said it was prepared to use its existing authority if Congress delays passing the Digital Asset Market Clarity Act.

Miners have another potential source of growth that bitcoin itself lacks: their power sites can be converted into AI data centers. The total value of deals announced across the sector has exceeded $70 billion over contract terms of 10-20 years. Companies that have already secured long-term AI contracts command higher valuations, while pure-play miners are more dependent on the price of bitcoin.

An Oninvest-compiled index of bitcoin miners includes 15 companies whose revenue depends primarily on mining. In the first half of 2026, the equal weight version of the index rose 14.6%, while the cap weight version gained 48.4%. By comparison, bitcoin lost 33.1% of its value over the same period, while the S&P 500 gained 10.1% and the Russell 2000 rose 22.6%. We spotlight three companies from the index that may be of the greatest interest to investors.

BitFuFu (FUFU)

Singapore-based BitFuFu combines self-mining with cloud mining, providing clients with computing power and equipment maintenance services. In the second quarter, revenue fell 63% year over year to $42.8 million, while the net loss came to $20.5 million versus net income of $47.1 million a year earlier.

However, its operating metrics began to recover over the summer: in August, the hashrate rose 45% month over month to 20.6 EH/s, while bitcoin production increased 55% to 174 BTC. The stock remains a pure-play bet on mining and has yet to expand into AI data centers.

The main risk is its heavy dependence on partners for capacity: self-owned capacity accounts for just 3.8 EH/s, while the remaining 16.8 EH/s comes from third-party suppliers and hosting clients. The latest analyst recommendations remain positive but have not been updated for some time. H.C. Wainwright has a target price of $4 per share, almost three times the stock’s Wednesday close. Roth Capital’s target price is $3 per share. Both firms have “buy” ratings on BitFuFu.

Cango (CANG)

Cango is a former Chinese auto-financing platform that changed its business in 2024-2025. It acquired mining equipment with a combined hashrate of 50 EH/s and sold its former business for around $352 million.

In the second quarter of 2026, revenue halved quarter over quarter to $50.8 million, while the net loss came to $81.6 million, mainly due to around $51 million in equipment write-offs and disposals. Meanwhile, the adjusted EBITDA loss narrowed to $10.7 million from $154.1 million.

The cash cost of mining one bitcoin, excluding depreciation, fell 5% to $73,313, leaving a cushion of less than 10% at a bitcoin price of around $78,500. At the same time, Cango is beginning to reduce its dependence on crypto. On September 3, its EcoHash subsidiary launched its first commercial GPU compute services at a Georgia site, where up to 3 MW has been allocated to AI. H.C. Wainwright placed its rating on Cango under review in August. Before that, in March, it had reiterated its “buy” rating at a target price of $3 per share, almost 55% above the stock’s Wednesday close.

HIVE Digital Technologies (HIVE)

Canada-based HIVE combines renewable-powered bitcoin mining with AI cloud computing through its BUZZ HPC subsidiary, which rents out GPU computing capacity. In the first quarter of its fiscal 2027, revenue rose 74% year over year to $79.1 million, while bitcoin production increased almost 150% to 1,004 BTC. The $142.9 million net loss was attributable mainly to a noncash provision related to a tax dispute in Sweden, while adjusted EBITDA remained positive at $13.4 million.

The AI business is the main growth driver. In August, BUZZ HPC signed a five-year contract worth $350 million, which brought active and contracted annualized revenue to $180 million, against a target of around $200 million by the end of 2026. The main risk is the high cost of expansion: fulfilling the new contract will require around $185 million in investment, versus $208 million in cash and cash equivalents at the end of the last quarter. However, the client will provide a $35 million upfront deposit, and the company intends to finance part of the costs with debt.

In August, Cantor Fitzgerald reiterated its “overweight” rating on HIVE at a target price of $8 per share, implying 158% upside. H.C. Wainwright maintained its “buy” rating at a target of $7 per share (both notes were seen by Oninvest). According to MarketWatch data, the average TP among eight analysts is $7.13 per share, more than double the stock’s last close. HIVE has seven “buy” ratings versus one “hold.”