Bitcoin mining stocks surge alongside rising crypto prices
(Kitco News) - Bitcoin mining companies offer investors ancillary exposure to the crypto market from the safety of the stock market in a similar manner as gold mining companies provide increased exposure to precious metals.
Over the past month, as the price of Bitcoin (BTC) climbed 26% from a low of $18,930 to its current price of $23,900, crypto mining companies have seen their stock prices increase up to 120% during the same period as traders scrambled to get exposure to the crypto market.
The leader of the pack was Marathon Digital Holdings (MARA), with a price gain of 124.12%, according to data from Yahoo Finance, followed by Core Scientific (CORZ) with a gain of 110.39%, 98.95% for Hut 8 (HUT), and a 96.69% increase in the price of Riot Blockchain (RIOT).
Judging from the outsized performance of these stocks, especially when compared to the 26% gain for Bitcoin and 67.8% increase for Ether (ETH), it would appear that crypto mining stocks were deeply oversold and have finally caught back up with the market.
It's not all sunshine and roses, however, as all of the companies mentioned above have posted widened losses despite rising revenues, driven largely by impairment losses on their crypto holdings.
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Core Scientific reported a 1,601% increase in self-mined Bitcoin year-to-date in its Q2 results filing, which was posted on Thursday, bringing the total mined to 6,567 BTC. Thanks to increases in digital mining revenue and hosting revenue, the company's Q2 revenue rose 118% YoY to $164 million.
According to Marathon Digital's Q2 results, the firm's BTC production has also increased YoY, with the firm mining 707 BTC in the quarter thanks to an 8% increase in Bitcoin production activity despite a "challenging macro environment."
Hut 8 Mining Corp. realized a 71% YoY increase in the amount of BTC it mined after it was able to increase its hash rate due to "additional highly efficient miners," earning 946 BTC for the quarter as it ramped up activity at its Ontario mining facility. Its revenue for Q2 increased 30.7% YoY to $43.8 million.
Despite the recent gains in terms of revenue and mining capacity, all of the crypto mining stocks mentioned above remain well below their 2021 highs and have a long way to go before they can regain their former glory. And with crypto prices continuing to struggle amid rising inflation, interest rates and energy costs, it may be a challenge for the current rally in crypto mining stocks to sustain itself.