Here’s why bitcoin mining stocks surpassed BTC price in 2021

Bitcoin (BTC) may have outperformed traditional financial markets in terms of investment returns, but the cryptocurrency still lags behind Bitcoin-related companies.

The price of BTC is up about 290% year over year, from $ 10,695 to just over $ 42,000. Meanwhile, shares of Marathon Digital Holdings (MARA), one of North America’s largest cryptocurrency miners, rose 1,641% over the same period.

Pumps under the direction of the organization

Many crypto miners are outperforming the BTC price in terms of year-over-year returns. For example, Canada-based Bitfarms (BITF) is up 1.736%, while Hut 8 Mining (HUT) and Riot Blockchain (RIOT) are up 1.010% and 913%, respectively, in one year.

Nick, founder of Ecoinometrics, a crypto-focused newsletter service, called mining stocks an “obvious choice” and noted that they gave institutional investors indirect exposure to the Bitcoin market.

“I bet a lot of institutional investors have yet to dive into spot BTC trading, mostly for compliance reasons,” the analyst stated in an article published on Sept. 27.

“It’s a bit like digging for gold when it used to be difficult to get hold of physical gold. The way these guys play is likely to stay away from spot and stock trading. “

The allegations surfaced when Morgan Stanley reported in its securities filing that it had more than doubled its exposure to the Grayscale Bitcoin Trust (GBTC), a traditional investment vehicle for financial investors.

Specifically, the Morgan Stanley European Opportunity Fund owns 58,116 shares in the Grayscale Bitcoin Trust (GBTC) as of July 31.

In July, Cathie Wood’s Ark Invest also bought over 450,000 GBTC shares valued at approximately $ 1.4 million. Coupled with the performance of mining stocks, these investments mean an increase in institutional appetite for traditional but crypto-focused investment products.

Nick added that investors will continue to put their capital in crypto mining stocks until they see a viable alternative like an exchange-traded fund in the US.

Scaling and hodling

Demand for mining stocks rose slightly as most companies focused on two key perspectives: scale and hold.

For example, Marathon reported in its August unaudited report that it received 21,584 top-of-the-line Bitcoin mining ASICs from Bitmain in 2021, adding that it will now have shipped 5,916 more. As a result, the company expects to have at least 133,000 bitcoin miners running by the middle of next year.

Meanwhile, Marathon notes that it currently holds 6,695 BTC, including the 4,812.66 BTC it purchased in January 2021, ramping up production in the future.

Similarly, Riot Blockchain’s August report shows that its bitcoin mining capacity has increased 451% year over year thanks to a team of 22,050 miners, with a hash rate of 2.2 exahashes per second (EH / S). The company mined 441 BTC in August 2021.

Related: Miners have amassed $ 600 million worth of Bitcoin since February

Riot plans to have 25,650 Bitmain machines up and running by early September and is currently building a new mining facility in Texas.