Bitcoin mining stocks have had an incredible year in 2023, providing investors with double-digit returns. They have outperformed both Bitcoin itself and the average stock market index by a significant margin.
Among the top performers, Riot platform stands out as the biggest gainer in 2023, with its stock rising by an impressive 442% from the lows recorded on January 3, 2023.
Marathon is not far behind, showing a remarkable 405% increase. Other mining company stocks, such as CleanSpark and Bitfarm, have also experienced substantial growth, ranging from 180% to 290%. In comparison, since the beginning of 2023, Bitcoin’s value has increased by 78%, and the Nasdaq Composite Index has seen a rise of 35%.
Mining Stocks vs. Bitcoin vs. Nasdaq Performance by TradingView
Mining Companies Reliant on Bitcoin’s Valuation
Several predictions suggest that Bitcoin could reach a six-figure value by 2024. While traders and investors pay attention, mining companies are particularly concerned about Bitcoin’s valuation for their sustainability. A recent report by Seeking Alpha analyzed Riot Platforms’ business model.
In June, Riot made a significant purchase of 33,280 miners for $162.9 million, aiming to enhance self-mining capacity by 2024. However, with the upcoming halving, miners’ rewards are expected to decrease by 50%, posing a risk to the entire mining industry.
The report highlighted that the average total business cost per Bitcoin in the mining sector ranges from $30,000 to $60,000. However, the highest value of Bitcoin ever reached is only $69,000. If there is a 50% reduction in Bitcoin mining revenue, many mining companies may struggle to survive.
Source: Seeking Alpha
The report strongly expressed doubts about the Bitcoin sector’s ability to avoid negative effects from the halving. Although mining stocks have outperformed Bitcoin this year, they are now considered overbought. The report advised investors that holding onto BTC mining stocks without solid underlying fundamentals is extremely risky.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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