Ethereum Miner Turns to Dogecoin: BIT Mining Dumps ETH After Merge, Seeking Greener Pastures

In a surprising twist in the crypto-sphere, BIT Mining (BTCM), once a leading Ethereum miner, has altered its crypto treasury strategy drastically. Following Ethereum’s monumental transition from proof of work to proof of stake, the Ohio-based miner, listed on the New York Stock Exchange, has shifted its focus to Dogecoin and Litecoin.

The company reported a revenue of $72.9 million for the last quarter, marking a near 20% increase from the previous quarter but witnessing a 75% plunge year on year. BIT Mining’s revenue is primarily split across three sectors: mining cryptocurrencies independently, mining as part of a pool, and hosting services within its data centers.

In the previous quarter, BIT Mining’s revenue from its mining pool reached $60 million, accounting for 82% of its total income. Meanwhile, self-mining and data centers each contributed approximately $6 million.

Prior to Ethereum’s transformation in September last year, known as the Merge, Ethereum mining made up over three-quarters of BIT Mining’s self-mining revenue. This pivotal shift in Ethereum’s consensus mechanism, which eradicated the necessity for crypto miners, predictably plunged BIT Mining’s self-mining income from $7.1 million in Q3 2022 to a mere $1.9 million in the subsequent period.

As Ethereum mining waned, the firm garnered $6.2 million from mining cryptocurrencies in Q1 2023, predominantly Litecoin (LTC) and Dogecoin (DOGE), post the shutdown of certain Bitcoin mining rigs. Notably, Dogecoin and Litecoin witnessed skyrocketing hash rates around the time of the Merge, despite their differing hashing algorithms from Ethereum.

Amid these changes, Analyst Mike Fay (via Seeking Alpha) has expressed bafflement over BIT Mining’s decision to sell off one-third of its Ethereum holdings, amounting to 1,602 ETH ($3 million at current prices). In contrast, the firm boosted its Dogecoin holdings by 62% quarter on quarter, escalating from 42.8 million DOGE ($3.1 million) to 69.5 million DOGE ($5 million). Its Bitcoin holdings remained steady at 289 BTC, worth $7.8 million.

With this shift, BIT Mining’s crypto treasury was almost 28% Dogecoin at the end of Q1 2023. The company’s total assets stood at $40.2 million, with liabilities amounting to $39 million, including lease obligations.

Fay argued against BIT Mining’s strategy, questioning why the firm would hold onto “meme coins” instead of leveraging Ethereum’s staking potential at virtually no cost. Despite rising Ethereum prices, BIT Mining’s decision has sparked speculation and criticism, further fueling the debate on effective digital asset management strategies.