It has been proven that mining companies and other companies related to Bitcoin are better than real Bitcoin.Although the value of Bitcoin has almost doubled since the beginning of this year, one of its close neighbors in the investment field has proven to be a more profitable buyer: mining companies
It has been proven that mining companies and other companies related to Bitcoin are better than real Bitcoin.
Although the value of Bitcoin has almost doubled since the beginning of this year, one of its close neighbors in the investment field has proven to be a more profitable buyer: mining companies.
Since January 1st, the stock prices of almost all listed Bitcoin mining companies have surged by over 100%, benefiting from the increase in BTC value and positive business development.
Bitcoin Miner VSBTC
MarathonDigital (MARA) is one of the largest public miners in computing power, and its stock price has risen 158% so far this year.
Meanwhile, competitors such as IrisEnergy (IREN) and RiotPlatforms (RIOT), which focus on renewable energy, saw their stock prices soar by 168% and 186%, respectively.
Mining companies make money by operating powerful and expensive computer equipment to mine the next block of Bitcoin, where a fixed portion of the new Bitcoin is attached to the block. Therefore, as the value of Bitcoin increases, the dollar denominated value of its rewards will also increase, leading to an increase in profits.
So far, Bitcoin has risen by 90% in 2023, mainly due to a series of US bank failures in March, which shook people's confidence in the traditional financial system.
Given BlackRock's application and the victory of the encryption industry court, spot Bitcoin ETFs may ultimately be approved by the end of this year, which has also led to a rise in Bitcoin ETFs.
On Monday alone, Bitcoin rose 5.6% to $31600, and the appellate court officially ordered the SEC to review Grayscale (GBTC)'s Bitcoin ETF application. Like mining companies, GBTC's stock price has also outperformed Bitcoin this year, rising by 201%.
Miners prepare for halving
Generally speaking, companies related to Bitcoin have higher beta values than Bitcoin itself, which means they are susceptible to greater fluctuations in both directions. For example, Coinbase (COIN), the only publicly traded cryptocurrency exchange, has risen 129% this year.
However, the mining industry has made unique progress this year in enhancing its value proposition to investors. Firstly, companies like CleanSpark (CLSK) - up 111% - announced multiple major investments in the latest Bitcoin mining hardware this year, enhancing their ability to win new Bitcoin.
Such investments by CleanSpark and other companies have helped Bitcoin's total computing power reach many new highs this year and reduced the cost of old mining hardware that has decreased efficiency over time.
Miners are also diversifying: many companies, including Iris, HIVE, Applied Digital, etc., have surpassed Bitcoin mining and entered the field of cloud computing/HPC services that utilize existing infrastructure. Multiple companies claim that the profit per unit of energy for such services is much higher than for Bitcoin mining.
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