Swan Bitcoin, a Bitcoin-focused financial services firm, said it is ending its managed mining business alongside its Initial Public Offering (IPO) plans.

On July 22, the firm’s CEO Cory Klippsten said:

“Swan is unlikely to continue with our Managed Mining business in the near term. Without the expectation of significant near-term revenue from our Managed Mining unit, we are pulling our plans to IPO in the near future.”

Klippsten also stated that the firm was “pulling back from our accelerated spending plan for our core financial services business. Unfortunately, this includes staff cuts across many functions.”

Why is Swan downsizing?

Swan’s decision is surprising, considering the firm recently launched a bespoke Managed Bitcoin Mining services in May that attracted interest from major institutional firms like stablecoin issuer Tether. 

At the time, the company stated that it had spent over $330 million to increase its mining capacity to 7.5 EH. It also had an ambitious plan of increasing its capacity to 19.5 EH this year and about 100 EH by 2026.

However, market observers noted that Bitcoin mining companies have considerably struggled following April’s halving event that cut mining rewards by 50%. Due to this, several miners, including Marathon Digital, have sought different revenue diversification strategies, such as pivoting towards artificial intelligence and mining other proof-of-work blockchains.

Nevertheless, the market is still experiencing bullish sentiments, with Bitcoin price enjoying a rebound buoyed by the strong inflows into the spot BTC exchange-traded funds (ETFs) and hopes of a Donald Trump presidency providing greater regulatory clarity for the emerging industry.

Klippsten acknowledged that the market conditions are currently favorable, pointing out that:

“This is an incredible moment in time for Bitcoin, with real institutional adoption, an increasingly favorable regulatory and political environment, and the ranks of Bitcoiners swelling in number.”

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Senior Editor at CryptoSlate

Also known as “Akiba,” Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.

Stablecoin issuer Tether has expanded its mining endeavors by collaborating with Swan’s Managed Bitcoin Mining service.

According to the press statement, the firm has dedicated an undisclosed amount of substantial capital to establish its Bitcoin mining operations through Swan.

Swan’s Managed Bitcoin Mining allows institutional investors to commit a minimum of $100 million to the Bitcoin mining ecosystem. Through the service, the firm plans to offer bespoke mining operations tailored to the specific needs of its clients.

Since August 2023, Swan Mining has spent over $330 million to increase its mining capacity to 7.5 EH. However, plans are to increase the capacity to 19.5 EH this year and about 100 EH by 2026.

Paolo Ardoino, the CEO of Tether, said:

“The collaboration with Swan in the mining sector has exceeded our expectations. Swan’s team has demonstrated an unwavering commitment to transparency and operational excellence, achieving rapid deployment of hashrate.”

Tether is the largest stablecoin issuer and revealed plans to invest approximately $500 million in mining. The company is the seventh-largest BTC holder globally, with approximately 75,354 BTC, valued at $5.23 billion.

Mining revenue dips

Tether’s foray into mining comes during a notable decline in daily revenue for BTC miners post-halving. Glassnode data showed a stark drop in total revenue from block rewards and transaction fees, hitting a low of 417 BTC as of May 7.

This downturn contrasts sharply with the initial excitement surrounding the halving and the emergence of innovative protocols like Ordinal Inscriptions and Runes. These protocols have garnered increased attention, stirred interest in the blockchain landscape, and contributed to miners’ earnings.

Ki Young Ju, the CEO of CryptoQuant, highlighted the transformative impact of these applications on miners’ income streams. He said:

“Building apps on Bitcoin has significantly changed miners’ income streams. Transaction fees now account for over 7% of their total revenue, up from 1% two years ago. This trend has persisted for the last four weeks and could potentially strengthen the network’s fundamentals.

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