Bitcoin Mining Companies Shift to Ethereum: A New Trend in the Encryption World?

In the digital asset space, a publicly traded company has recently made a significant strategic adjustment. The company, named Bit Digital, announced that it will gradually exit the Bitcoin mining business through a $150 million public offering and fully shift its focus to Ethereum staking and fund operations. This substantial amount will be entirely used to purchase Ether (ETH), making it one of the largest investors in ETH on the public market.

This move is not just a simple business adjustment, but more like a bold bet. Bit Digital plans to gradually close or sell its Bitcoin mining business and will convert its held Bitcoin assets into Ether over time. As of the end of March 2025, the company held approximately 24,434 Ethers and 418 Bitcoins, laying the foundation for its future "Ethereum purism" strategy.

This shift has sparked industry reflections on the development direction of the encryption currency sector. Bitcoin was once regarded as "digital gold," and its mining business was one of the hottest investment directions in the digital asset field. However, as the challenges facing the industry continue to grow and the Ethereum ecosystem matures, Bit Digital's strategic shift may indicate that the industry is undergoing deep structural changes.

To understand Bit Digital's decisions, it is necessary to review the overall situation 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 faced unprecedented challenges. The Bitcoin "halving" event in April 2024 reduced miners' block rewards from 6.25 BTC to 3.125 BTC. At the same time, mining difficulty continued to rise, and the hash rate increased rather than decreased, reaching 831 EH/s by May 1, 2025. Transaction fee income plummeted, with hash prices dropping sharply from $0.12 in April 2024 to about $0.049 in April 2025. High energy costs and the need to upgrade equipment have severely squeezed the profit margins of many mining companies. Bit Digital's Bitcoin mining revenue in the first quarter of 2025 fell by 64% year-on-year to $7.8 million, and the number of Bitcoins mined plummeted by 80% to 83.3 coins, reflecting the difficulties faced by the entire industry.

In contrast, Ethereum successfully transitioned from a proof-of-work (PoW) 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, attracting institutional investors seeking stable returns and lower operating costs.

Bit Digital's Strategic Shift: A $150 Million Gamble

Fundraising details and Ethereum layout

Bit Digital has 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), Bit Digital had issued 128.05 million shares, and the addition of 75 million shares means that the outstanding shares have increased by 58.5%, diluting existing shareholders' equity by nearly 37%. It is worth noting that all proceeds from this fundraising will be used to purchase Ethereum, rather than for operational growth or debt reduction. This means that the company will be fully exposed to the price fluctuations of Ethereum after its strategic transformation, and its financial condition and stock performance will be directly linked to the value of ETH. Such large-scale equity dilution, coupled with a single-use of funds, demonstrates Bit Digital management's high confidence in Ethereum's future performance.

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

Bid Farewell to Bitcoin Mining: A Rational Choice

Bit Digital's decision to completely exit the Bitcoin mining business is a rational response to the deep-seated dilemmas facing the industry. After the Bitcoin halving in 2024, mining profitability has significantly declined, with Bit Digital mining only 83.3 Bitcoins in the first quarter of 2025, a year-on-year decrease of 80%. The high energy consumption and capital-intensive nature of Bitcoin mining make it difficult to sustain under market volatility and halving impacts. Mining requires continuous investment in new hardware and faces ever-increasing operating costs, while Ethereum staking relies on more economical hardware and lower energy consumption, significantly reducing operating costs and environmental impact. For example, the energy consumption of the Ethereum PoS system is reduced by 99.95% compared to PoW, and its energy consumption levels can be compared to that of a small town, rather than a whole country. Bit Digital's transformation is not only a measure to cope with financial pressure but also aligns with the major trend in the crypto industry shifting from energy-intensive PoW to capital-efficient PoS, aiming to achieve both growth and sustainability. This shift reflects an evolution in the values within the crypto industry: where competition in computing power was once central, capital efficiency and environmental sustainability have now become the new competitive advantages.

Ethereum Staking: A New Era of "Digital Gold Mining"?

The Battle Between PoW and PoS: Efficiency, Yield, and Sustainability

The core of Bit Digital'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 known for its strong security and decentralization characteristics, but at the cost of massive energy consumption, with annual electricity usage reaching between 67 to 240 terawatt-hours, and an energy cost of about 830 kilowatt-hours per transaction. This not only brings environmental issues but also imposes high electricity costs and specialized hardware investments on miners.

In contrast, Ethereum has shown remarkable energy efficiency after transitioning to the PoS mechanism. The PoS system eliminates energy-intensive computing requirements by allowing validators to participate in network security and transaction verification through staking tokens. As a result, Ethereum's energy consumption has been reduced by 99.95%, with the energy consumption per transaction being only 50 kilowatt-hours. This efficiency improvement makes it a more sustainable blockchain solution and significantly lowers operational costs, providing an attractive option for companies seeking stable returns and reduced expenses. The PoS mechanism offers a more appealing 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.

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

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

The emergence of liquid staking derivatives (LSDs) provides an elegant solution. LSDs allow users to earn a derivative token (such as stETH for Ethereum) representing their staked assets while simultaneously staking cryptocurrency assets. This derivative token can be freely traded or used as collateral within the decentralized finance (DeFi) ecosystem, thereby maintaining liquidity of funds while earning staking rewards. This mechanism significantly improves capital efficiency and lowers the barriers to entry for staking participation. The "Shapella" upgrade of Ethereum in April 2023 activated the withdrawal function for staked ETH, further driving the surge in demand for LSDs. LSDs address the liquidity dilemma, enhance capital efficiency, and reduce the entry barriers for staking, significantly increasing the attractiveness of the Ethereum ecosystem to institutional capital.

Institutional Perspective: Can Ethereum Surpass Bitcoin?

In the cryptocurrency space, the discussion about whether Ethereum can surpass Bitcoin by 2025 has been a focal point. The CEO of a well-known asset management company views Bitcoin as "digital gold" but also emphasizes the revolutionary potential of tokenization for investments, stating that "every asset can be tokenized," which opens the door for Ethereum as a programmable platform. An analyst from a large bank believes that Bitcoin's dominance may persist in 2025, attributed to the inflow of funds into spot Bitcoin ETFs and corporate purchase plans. Meanwhile, the founder of a well-known software company is famous for his firm "Bitcoin first" stance. A certain investment management company holds a positive outlook on the long-term prospects of both Bitcoin and Ethereum. These viewpoints reflect different narratives institutions have regarding crypto assets: Bitcoin as a store of value, and Ethereum as the core of a programmable platform and innovative ecosystem.

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

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

This case clearly reveals the trend of the cryptocurrency market moving from "wild growth" to "refined cultivation". In the past, competition for computing power and the narrative of "digital gold" dominated the market. However, now, with the maturity of Ethereum's PoS mechanism, the focus of the industry is shifting towards capital efficiency, environmental sustainability, and predictable returns. Financial innovations like liquid staking derivatives (LSDs) further unlock asset liquidity, driving the deep integration of the DeFi ecosystem and the limitless expansion of application scenarios. This indicates that the cryptocurrency industry is transcending mere speculative attributes and developing towards more practical value, more refined financial engineering, and broader application fields.

Looking to the future, the cryptocurrency industry will continue to focus on the resonance of efficiency, sustainability, and compliance. Technological innovations will continue to reduce energy consumption while enhancing transaction speed and scalability. At the same time, as regulatory agencies gradually clarify businesses such as staking, the confidence of institutional investors will further strengthen. Bit Digital's gamble is a concentrated manifestation of these macro forces at a micro level. Its success or failure is not only related to the fate of a single company but will also provide valuable experience and insights on how the entire digital asset sector can adapt, innovate, and achieve long-term success in an ever-evolving market. Has the "wind direction" of the cryptocurrency world really changed? Bit Digital's actions have undoubtedly thrown a heavy stone, stirring up layers of ripples, and are worthy of our ongoing attention and in-depth reflection.