Bitcoin Mining Companies Shift to Ethereum: A Change in Industry Trends?

In the cryptocurrency sector, a remarkable strategic transformation is unfolding. Nasdaq-listed company Bit Digital announced a significant decision in June 2025: through a $150 million public offering, the company will gradually exit the Bitcoin mining business and fully shift to Ethereum staking and fund operations. This substantial amount will be entirely used to purchase Ethereum, making Bit Digital one of the largest companies in the public market to make a financial commitment to ETH.

This move has sparked widespread attention in the industry: is the "wind direction" of the digital asset sector changing? Bitcoin was once regarded as "digital gold", and its mining operations were one of the hottest investment directions in the digital asset field. However, with a series of challenges arising and the continuous maturity of the Ethereum ecosystem, Bit Digital's strategic shift may signal a deeper structural change in the industry.

To understand Bit Digital's decision, we need to examine the macro environment of the cryptocurrency market from 2024 to 2025. Although the price of Bitcoin is expected to break the $100,000 mark in early 2025, the Bitcoin mining industry faces unprecedented challenges. The "halving" event in April 2024 directly reduced miners' block rewards from 6.25 BTC to 3.125 BTC. At the same time, mining difficulty continues to rise, and hash rates have increased rather than decreased, reaching 831 EH/s by May 1, 2025. Revenue from transaction fees has significantly decreased, and hash prices plummeted from $0.12 in April 2024 to about $0.049 in April 2025. High energy costs and ongoing equipment upgrade demands have severely compressed the profit margins of many mining companies. In the first quarter of 2025, Bit Digital's Bitcoin mining revenue fell 64% year-on-year to $7.8 million, and the number of Bitcoins mined plummeted by 80% to 83.3 coins, which is a microcosm of the industry's difficulties.

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

Bit Digital 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 significantly diluted the equity of existing shareholders: prior to the issuance (as of September 2024), Bit Digital had 128.05 million shares outstanding, and the additional 75 million shares represent a 58.5% increase in the float, diluting existing shareholders' equity by nearly 37%. It is worth noting that the proceeds from this fundraising will be "specifically used to purchase Ether," rather than for operational growth or debt reduction. This means the company is "100% exposed to Ether price fluctuations" after the strategic transformation, with its financial health and stock price performance directly linked to ETH's valuation.

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 become a "pure Ethereum staking and fund management company."

Bit Digital's choice to completely abandon Bitcoin mining is a rational response to the deep-seated challenges in the industry. After the Bitcoin halving in 2024, mining profitability has significantly tightened, with Bit Digital 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 make it unsustainable amid market fluctuations and halving impacts. Mining requires continuous investment in new hardware and faces rising operational costs, while Ethereum staking "relies on cheaper machines and lower energy consumption," significantly reducing operational costs and environmental footprint.

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

In contrast, the PoS mechanism adopted by Ethereum after the "merge" demonstrates remarkable energy efficiency. The PoS system eliminates energy-intensive computational demands by allowing validators to participate in network security and transaction verification by staking tokens. As a result, Ethereum's energy consumption has decreased 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 reduces operating 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 from Ethereum staking typically ranges from 4% to 7%, providing a more stable and predictable cash flow compared to the unpredictability of Bitcoin mining.

The emergence of Liquid Staking Derivatives (LSDs) has further enhanced the appeal of Ethereum staking. LSDs allow users to obtain a derivative token representing their staked assets (such as stETH for Ethereum) while staking crypto assets. This derivative token can be freely traded in the decentralized finance (DeFi) ecosystem or used as collateral, thereby maintaining liquidity of funds while earning staking rewards. This mechanism significantly improves capital efficiency and lowers the barriers to entry for staking. The "Shapella" upgrade of Ethereum in April 2023 activated the ability to withdraw staked ETH, further driving the surge in demand for LSDs.

In the cryptocurrency space, the discussion about whether Ethereum can surpass Bitcoin by 2025 has been a focal point. BlackRock CEO Larry Fink views Bitcoin as "digital gold," but also emphasizes the revolutionary potential of tokenization for investments, believing that "every asset can be tokenized," which opens the door for Ethereum as a programmable platform. JPMorgan analysts believe that Bitcoin's dominance may continue into 2025, attributed to the inflow of funds into spot Bitcoin ETFs and corporate purchase plans. Meanwhile, MicroStrategy founder Michael Saylor is known for his firm "Bitcoin first" stance. Fidelity Digital Assets holds a positive outlook for the long-term prospects of both Bitcoin and Ethereum.

Bit Digital's strategic pivot is a microcosm of the "winds of change" in the cryptocurrency industry, and a brave response to market dynamics and technological evolution. The company resolutely exited the energy-intensive and profit-squeezed Bitcoin mining business, fully embracing Ethereum staking, and 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 evolving from "wild growth" to "meticulous cultivation." In the past, competition in computing power and the narrative of "digital gold" dominated the market. Now, with the maturity 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 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, developing towards more practical value, more refined financial engineering, and broader application fields.

Looking ahead, the crypto industry will continue to focus on the resonance of efficiency, sustainability, and compliance. Technological innovations will continue to reduce energy consumption, enhance transaction speed, and improve scalability. At the same time, as regulatory bodies gradually clarify businesses such as staking, the confidence of institutional investors will be further strengthened. The transformation of Bit Digital is a concentrated embodiment of these macro forces at a micro level. Its success or failure not only concerns the fate of a single company but will also provide valuable experience and insights for the entire digital asset field on how to adapt, innovate, and achieve long-term success in an ever-evolving market.