Recent findings indicate that executives from top U.S. Bitcoin mining firms are receiving hefty compensation packages, causing a stir among investors. These packages far exceed those in the energy and IT sectors. This insight comes from a recent VanEck report.
The review examined eight mining companies: Bit Digital, Cipher Mining, CleanSpark, Core Scientific, Hut 8, Marathon Digital, Riot Platforms, and TeraWulf. The investigation revealed that the average executive payout in 2024 was $14.4 million, a significant increase from the previous year’s $6.6 million. Interestingly, these high earnings persist despite base salaries for mining executives remaining comparable to those in other industries, averaging $474,000 in 2023.
Stock-based compensation, accounting for 89% of the miner executive pay in 2024, is the main contributor to these high totals. Yet, this approach poses concerns regarding short- to medium-term vesting, limited performance gating, and risks of dilution that could undercut shareholder value.
Shareholder backlash is becoming evident. While nearly 99% of executive pay proposals across corporate America passed during the 2024 proxy season, Bitcoin miners only saw an average support rate of 64%.
Changes are emerging, however. Six of the eight reviewed miners have expanded their use of performance stock units (PSUs), which vest over multiple years and are tied to share price or total shareholder return benchmarks. This shift indicates a move towards longer-term alignment, although not all firms have fully adopted these practices yet.
Despite these changes, the question of whether these pay structures are delivering value remains. VanEck’s study revealed stark contrasts when comparing total executive pay with each miner’s 2024 market-cap growth. For instance, at TeraWulf and Core Scientific, executive pay represented around 2% of the firms’ market-cap increases, suggesting efficient pay-for-performance alignment. However, Riot’s executives received $230 million, equivalent to 73% of the company’s 2024 market-cap gains, while Marathon’s executive pay made up 18% of its market-cap growth.
Such disparities have drawn scrutiny, especially given Riot’s history of shareholder pushback on pay proposals and concerns over dilution tied to expanding equity compensation plans.
