Bitcoin Mining Companies Face Harshest Margin Environment
Bitcoin (BTC) miners are experiencing significant pressure on their profit margins, even with elevated Bitcoin prices. Industry analysts are describing the current climate as the "harshest margin environment" on record, leading to shrinking balance sheets, reduced leverage, and companies like CleanSpark actively paying down Bitcoin-backed credit lines.
This strain is evident in public markets, where Bitcoin miners and other BTC proxy trades have faced considerable pressure. A notable example is the sharp decline in the shares of American Bitcoin.
However, not all segments of the crypto market are retreating. Capital is flowing into crypto-adjacent platforms, with prediction market Kalshi recently raising $1 billion at an $11-billion valuation. This valuation surge follows a tenfold increase in trading volumes since 2024, allowing Kalshi to overtake Polymarket.
Meanwhile, Ether is gaining traction in derivatives markets. CME Group reports that Ether (ETH) futures volumes have recently surpassed those tied to Bitcoin. This trend reflects rising options volatility and growing trader interest in the cryptocurrency.
This week's Crypto Biz report examines the intensifying pressure on Bitcoin miners, the surge in Ethereum derivatives activity, and Kalshi's significant funding round.
Mining Economics Under Pressure
Renewed volatility in the Bitcoin market has pushed mining economics into what is being called the "harshest margin environment of all time." According to TheMinerMag, key warning signs include structurally low mining revenues due to falling hash prices, rising operating costs, and equipment payback periods extending beyond 1,000 days.
In response to these worsening economics, "balance sheets are retracting," the publication noted. CleanSpark's decision to fully repay its Bitcoin-backed credit line with Coinbase serves as a specific example of miners moving to reduce financial risk.
Bitcoin mining stocks have remained volatile throughout 2025. The industry is still adjusting to the revenue shock from last year's Bitcoin halving, which reduced mining rewards by half. Concurrently, many miners are exploring diversification into AI and high-performance computing workloads to secure more stable and predictable revenue streams beyond Bitcoin mining alone.
American Bitcoin Stock Plummets
Shares of American Bitcoin, a mining and digital asset treasury company associated with Eric Trump, experienced a significant drop of more than 50% in a single trading session this week. This sharp decline underscores the extreme volatility that continues to affect crypto-linked equities.
The stock lost approximately half its value shortly after the market opened on Tuesday, extending a broader sell-off across Bitcoin mining stocks and other so-called crypto "proxy" trades. This trend has intensified since Bitcoin pulled back from its October high.
American Bitcoin shares are now down more than 75% from their post-listing high of $9.31, which was reached shortly after the company began trading publicly through a reverse merger with Gryphon Mining. This steep decline highlights growing investor caution toward speculative crypto equities as Bitcoin prices and mining economics face increasing pressure.
Kalshi Secures $1 Billion in Funding
Prediction market Kalshi has successfully raised $1 billion at an $11-billion valuation, signaling a renewed investor interest in event-based trading.
The Series E funding round followed Kalshi's strongest month on record for trading activity. The round was led by crypto-focused venture firm Paradigm, with participation from Andreessen Horowitz, Sequoia Capital, and ARK Invest.
According to industry data, Kalshi's trading volume reached $4.54 billion in November, surpassing its previous all-time high. The company stated that its trading activity has grown tenfold since 2024, enabling it to surpass rivals such as Polymarket and become the largest prediction market by volume.
Ether Derivatives Activity Surges on CME
CME Group has reported a sharp increase in Ether futures trading activity, with volumes recently surpassing those of Bitcoin options. The exchange suggests this surge may indicate a catch-up trade or the initial stages of a broader Ether "super-cycle."
In a recent video, CME executive Priyanka Jain stated that ETH options are currently exhibiting higher volatility compared to Bitcoin options. This shift appears to be attracting increased speculative and hedging activity.
Jain commented, "This heightened volatility has served as a powerful magnet for traders, directly accelerating participation in CME Group’s Ether futures. Is this Ether’s long-awaited super-cycle, or merely a catch-up trade driven by short-term volatility?"
Earlier this week, CME Group launched a new Bitcoin Volatility Index, along with several additional cryptocurrency benchmarks. These offerings provide traders with standardized pricing and volatility reference data.
