Several public Bitcoin miners were on the brink of bankruptcy at the end of last year. But the latest rally in the market infused a sense of careful optimism into the Bitcoin mining sector, resulting in massive gains for most associated stocks.
Bitcoin Mining Stocks for the Win
As Bitcoin miners slowly escape the incessant bear trap, stocks related to the sector are now seeing a notable resurgence.
According to BTC mining expert Jaran Mellerud, bitcoin mining stocks have suddenly rallied alongside the price of the flagship crypto-asset in 2023, allowing “wound-licking mining stock investors to regain some of their massive losses.”
As BTC amassed 80% YTD gains, the HI Crypto Mining Stock Index raked 115% during the same period. In the process, the industry’s leading mining firms have not only outpaced Bitcoin itself but also the top tech stocks. Even the tech-heavy NASDAQ 100 Index only managed a 20% gain so far this year.
Best Performing Miners
At the top, Core Scientific positioned itself as the best-performing Bitcoin mining firm so far in 2023. It was one of the many companies that filed for bankruptcy last year. It had accused Celsius of failing to pay its power bills and subsequently cited the non-payment as a major factor in the liquidity issues. Even so, its stocks recorded an astonishing 455% in gains.
Mellerud, in his analysis, explained that its massive debt boosted its equity this year. The miner’s cash flows relative to equity have been “positively affected (but disproportionately so) by the improvements in mining economics.”
Meanwhile, Digihost, Cipher, Riot, Iris Energy, and Marathon also performed well. Most of these mining firms have relatively low debt levels relative to equity and are thus significantly less financially leveraged than Core Scientific, Mellerud observed.
The analyst further pointed out the resemblance of the current market cycle to that of Bitcoin’s mini bull cycle of 2019, where the crypto-asset surged by 260% from bottom to top. If this cycle repeats, bitcoin is expected to top out at $42k sometime this year. This also means that Bitcoin mining stocks are likely to soar, as well.
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