Bitcoin mining stocks have outperformed bitcoin

[importedsteak]

To much surprise, the top 5 mining companies have actually outperformed bitcoin since 2020. It's surprising because very few things on this planet are more volatile and bi-polar than crypto, but there is indeed a drastic difference in volatility here.

Part of this has to do with the fact that bitcoin has become less volatile over the years as it starts to benefit from the network effect. In addition, high growth stocks tend to trade off of multiples of expected earnings. It all plays into the reason why from Aug 2020 to Nov 2021 bitcoin mining index increased 1,503% while bitcoin only increased 474%. Take the 'only' with a grain of salt

Questioning whether the top 5 mining companies (Marathon, Aker, SBI, Northern, and Riot) will make for outsized returns again in the next bull cycle. Bitcoin is now up 31% from the 'local' low, while those mining companies are up 90%. Very fascinating to see these equities outperform bitcoin itself, and chances are it continues to happen.

[mk4]

It can make sense. I'm going to guess that a good chunk of these mining companies sell the mined bitcoin, not hold them; effectively giving them cashflow. Bitcoin obviously doesn't give you cashflow, hence being less attractive as an investment to some(probably most) investors especially in times of economic uncertainty and fears of potentially worse economic conditions.

And there's also the possibility that some of these companies were very undervalued book-wise in the first place, hence the bigger bounce. Idk tho, I'm too lazy to check their filings.

[Don Pedro Dinero]

It can make sense.

I agree. It can or can't.

To much surprise, the top 5 mining companies have actually outperformed bitcoin since 2020.

This is not statistically significant. Even if it had been outperformed throughout history, we could not be sure that this would continue to be the case in the future, as the history of bitcoin is very short, but at least we would have more data support.

[hugeblack]

The way in which the markets change in the stock market is completely different from the results of the actual reports of these companies. For example, these companies may repurchase their shares, which means the impression to investors that they are making good profits, although this does not happen.

Do not forget that these companies made legendary profits last year due to the high price of Bitcoin and energy costs, which means that they have a lot of money that they may use to strengthen their position in the stock market.

In general, in short, what I am trying to convey is that stock results are not a measure as far as whether these companies will survive if the price drops sharply.

[pooya87]

It can make sense. I'm going to guess that a good chunk of these mining companies sell the mined bitcoin, not hold them; effectively giving them cashflow. Bitcoin obviously doesn't give you cashflow, hence being less attractive as an investment to some(probably most) investors especially in times of economic uncertainty and fears of potentially worse economic conditions.

And there's also the possibility that some of these companies were very undervalued book-wise in the first place, hence the bigger bounce. Idk tho, I'm too lazy to check their filings.

Additionally the price of the shares that is being sold on the stack market is not determined based on bitcoin price alone. Like anything else that is traded, the price of these shares are decided based on what happens in the market. If the stock is hyped up enough (bitcoin rise helps that hype too) their shares can gain a bigger value than they are worth.

It works both ways too. For example the mining pool called MARA that announced that they were censoring bitcoin blocks they mined had their stocks dump hard, which means their stock underperformed compared to bitcoin. (At least until they reversed their decision and begged for forgiveness!)

[DaveF]

To much surprise, the top 5 mining companies have actually outperformed bitcoin since 2020. It's surprising because very few things on this planet are more volatile and bi-polar than crypto, but there is indeed a drastic difference in volatility here.

Part of this has to do with the fact that bitcoin has become less volatile over the years as it starts to benefit from the network effect. In addition, high growth stocks tend to trade off of multiples of expected earnings. It all plays into the reason why from Aug 2021 to Nov 2022 bitcoin mining index increased 1,503% while bitcoin only increased 474%. Take the 'only' with a grain of salt

Questioning whether the top 5 mining companies (Marathon, Aker, SBI, Northern, and Riot) will make for outsized returns again in the next bull cycle. Bitcoin is now up 31% from the 'local' low, while those mining companies are up 90%. Very fascinating to see these equities outperform bitcoin itself, and chances are it continues to happen.

Nov 2022? Are you seeing into the future for a real number?
Also, without knowing all the facts about other money (investors) coming into the businesses you don't know how real the numbers are.
And are they real or a statistical blip. Just about anyone can pick any 2 things and a specific set of dates / times / other data. To show something. But you really want to see several 3 to 5 year blocks of time at a minimum.

-Dave

[importedsteak]

Oops that was a typo. It meant to say from 2020 to 2021, so that's just been fixed. Thanks


[/quote]

Nov 2022? Are you seeing into the future for a real number?
Also, without knowing all the facts about other money (investors) coming into the businesses you don't know how real the numbers are.
And are they real or a statistical blip. Just about anyone can pick any 2 things and a specific set of dates / times / other data. To show something. But you really want to see several 3 to 5 year blocks of time at a minimum.

[/quote]