Why Are Miners’ Shares Outperforming Bitcoin Price In 2021?

Bitcoin may have outperformed traditional financial markets in terms of investment returns, but it still lags behind the companies involved.

Bitcoin price has increased from $ 10,695 to nearly $ 42,000 today, about 290% year over year (yr). Meanwhile, shares of Marathon Digital Holdings (MARA), one of North America’s largest cryptocurrency miners, rose 1,641% over the same period.

Weekly frame of the MARA stock price chart | Source: TradingView

Institutions that lead the bull run

Many crypto miners are outperforming the Bitcoin price in terms of year-over-year profits. 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.

Bitcoin’s performance on the spot markets versus crypto-focused stocks in one year | Source: Ecoinometry

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 get into bitcoin trading on the spot market, mostly for regulatory reasons,” said Nick. explain in an article published on Sept. 27, adding:

“It’s a bit like the previous gold diggers, it was very difficult to get physical gold. The way these guys play is likely to stay away from the spot market and trade stocks instead. “

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

Specifically, the Morgan Stanley Europe 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 more than 450,000 GBTC shares valued at approximately $ 1.4 million. Coupled with the performance of mining stocks, these investments have shown an increase in institutional demand for traditional but crypto-focused investment products.

Nick added that investors will continue to invest their capital in crypto mining stocks as long as they don’t see a viable alternative like an exchange traded fund (ETF) in the US.

Scale and hold

Demand for mining stocks increased as most companies focused on two key perspectives: scaling and holding.

Marathon has for example report in their August unaudited report that after receiving the best 21,584 Bitcoin mining ASICs from Bitmain in 2021, they are receiving an additional 5,916 currently being shipped. As a result, Marathon is expected to run at least 133,000 bitcoin miners by the middle of next year.

Additionally, the company said it currently holds 6,695 BTC, including 4,812.66 BTC purchased in January. At current prices, Marathon Bitcoin is currently around $ 333.4 million, enough to give the company a future expansion in production to enable.

The same, similar, report August of Riot Blockchain reveals that Bitcoin mining capacity has increased 451% year over year thanks to a fleet of 22,050 miners with a capacity of 2.2 exahash per second (EH / s). You mined 441 BTC in August 2021.

Riot expects to have 25,650 Bitmain miners up and running by early September, and the company is currently building a new mining facility in Texas.

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Mr. Teacher

According to Cointelegraph

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