• In the short term, mining stocks outperform the Bitcoin price

  • The following is an excerpt from a recent issue of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. Subscribe now to be among the first to receive these insights and other on-chain bitcoin market analysis directly in your inbox.

    Holding North American bitcoin miner equity is where to get indirect bitcoin exposure or value investment bitcoin opportunities in the public markets.

    The top four publicly traded North American miners (Marathon Digital Holdings, HUT 8 Mining, Riot Blockchain, Inc, and HIVE Blockchain Technologies) have average YTD returns of up to 140 percent, compared to 49 percent for bitcoin. HODLing bitcoin remains the best long-term option for most, but over the last two years, we’ve clearly seen a trend of effective bitcoin miners outperforming bitcoin returns. Miner revenue (in USD terms) continues to rise as the Bitcoin network grows around the world.

    Zooming out to the beginning of 2020, the average return among these miners is 5.2 times greater than bitcoin’s return of 464 percent. They have a combined market capitalization of $9.18 billion.

    When we dig deeper into quarterly and monthly miner updates, we see a larger story emerging, with the most successful miners attempting to do two things: rapidly scale up production and increase their HODLing supply.

    In August, Marathon’s monthly bitcoin production increased by 6%, bringing its total bitcoin holdings to 6,695 BTC. In January 2021, 4,812 BTC were purchased for an average price of $31,168 from its bitcoin holdings. Marathon, like many other bitcoin miners, is expanding its bitcoin treasury, keeping the company well capitalized and ready to deploy assets if needed.

    Riot had approximately 3,128 BTC as of August 31, all of which were generated by its self-mining operations. Riot expects to achieve a total hash rate capacity of 7.7 EH/s with a fully deployed mining fleet of 81,146 Antminers by Q4 2022. Marathon also plans to deploy a mining fleet of 133,000 machines by the middle of next year, and they appear to be on track with 21,584 miners secured as of September 1.

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