The share prices of the largest crypto mining companies have plummeted in lockstep with the price of bitcoin, which has gone from almost $70,000 to roughly $42,000 today.
However, the drop in those mining stocks — which many believe are a type of turbo-charged proxy for bitcoin’s price — has been much more pronounced than bitcoin’s. Since November’s highs, the stock values of several of the top crypto miners have halved.
The market value of Nevada-based Marathon Patent Group has decreased from $7.65 billion in early November to around $3 billion today, according to data from The Block Research.
So, Riot Blockchain, in Colorado, has dropped in value from $4.25 billion to $2.05 billion. Hut 8 mining, situated in Toronto, is reduced from $2.33 billion to $1.19 billion.
Hive, Argo Blockchain, and Canaan have all seen their stock values collapse. That’s, though not as dramatically as their larger competitors.
Given the difficulties that crypto miners have faced in recent months. That’s, the performance of these equities is unsurprising. Despite the evasive efforts of China’s crypto miners. Of course, authorities in China have proven increasingly skilled in snuffing out mining activities following a blanket ban.
China’s example has been followed by others. Kosovo only recently made crypto mining illegal. Of course, in the midst of rolling blackouts imposed due to the country’s energy crisis. Also, Bitcoin mining has also been hampered by unrest in Kazakhstan.
Another important consideration is dilution. Crypto mining is a capital-intensive activity. Then, and operators have had to raise substantial sums from public markets investors.
But arguably more important than these external variables in the bitcoin mining companies’ collapse. Of course, is the fact that this is exactly how experts predicted such equities would behave.
Ethan Vera, COO of Luxor Tech, compared mining stocks to “a levered trade on bitcoin” in March of last year.
The reason for this is that miners must invest extensively in infrastructure that will create more bitcoin in the future. Also, in addition to merely investing in and keeping bitcoin.
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