The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter.
There’s a new paradigm unfolding among the large public bitcoin miners: They don’t want to sell their bitcoin, and they also want to acquire more.
One strategy is to loan out a portion of their bitcoin holdings, thus earning fiat yield that can directly go towards paying their operating expenses.
Marathon and Riot, major public miners that report November production updates, both increased their bitcoin treasuries over the last month.
Interest rates for bitcoin yield have been pushed further down this year as the cash and carry basis trade narrowed and GBTC shares started to trade at a discount instead of a premium.
Right now that contango trade, longing spot and selling futures, is sustaining around 14% yield which is up from single digits in Q3.
Genesis Global Capital noted in its latest reporting that although bitcoin loans have increased, the weighting of their loan book in Q3 favored more ether and USDC loans as investors are pushed further along the risk curve in the search for a higher yield.