The Valkyrie Bitcoin
$
82,699 Mining ETF, launched by CoinShares, is currently garnering attention from investors after a challenging start in 2023. The ETF has experienced a significant decline of 43% since the beginning of the year, offering crucial insights into the overall market situation. Analyst Eric Balchunas describes the ETF’s performance as one of the lowest of the year, prompting a reevaluation of investment strategies.
Poor Performance of Mining-Focused ETF
CoinShares’ ETF invests in publicly traded companies engaged in bitcoin mining activities. Many of the 21 companies in its portfolio suffered considerable value losses in the first quarter of 2025. Notably, IREN, which holds a 15% share, experienced a striking decline of approximately 42%, while Core Scientific, with a 14% portfolio share, saw a drop of up to 48%. Cipher Mining’s performance is equally dismal; its value decreased by 52%, holding a 9.6% share in the ETF.
Even the tech giant NVIDIA, despite accounting for 5% of the portfolio, faced a decline exceeding 20%. This scenario raises concerns regarding trust not only in cryptocurrency mining but also in related technologies. The ETF currently manages assets worth $147.2 million.
Strategic Challenges and Decreased Mining Efficiency
According to the ETF’s investment policy, companies are expected to derive at least 50% of their revenue or profits from bitcoin mining. Firms involved in specialized hardware, software, and chip production can also be part of the ETF. However, the rising network hash rate and transaction difficulties negatively affect these companies’ profitability.
Particularly, low transaction fees significantly limit miners’ revenues. Reduced efficiency and rising energy costs further strain mining companies financially, contributing to the ETF’s value drop. As Balchunas noted, the ETF’s performance by 2025 serves as an important signal regarding the current market dynamics.
Increasing Interest in Alternative Investments
With decreasing interest in bitcoin mining companies, investors are shifting towards alternative asset classes. Metal-themed ETFs and gold mining stocks have shown a more positive trend this year. For instance, the Equity World Basic Materials DAXglobal Gold Miners ETF has gained 38% since the beginning of the year, indicating that investors are leaning towards less risky and more stable areas.
Despite efforts to enhance mining efficiency through blockchain network expansion, there has yet to be a positive impact on ETF performance in the short term. Conversely, the challenges in mining present both risks and opportunities for investors. The volatility of market conditions necessitates that investors adopt flexible and diversified strategies.
