Bitcoin Miners Outperforming BTC in 2021: Discover Why
Bitcoin mining companies have outperformed Bitcoin itself this year, with shares of publicly-traded firms surging over 100%. The rising value of Bitcoin and positive business developments have contributed to the profitability of these companies. Mining companies earn money by mining Bitcoin's next block, and as the value of Bitcoin rises, so does their profit. Additionally, mining companies have made strides in boosting their value proposition to investors through investments in new mining hardware and diversification into other services.
Bitcoin mining companies have proven to be more profitable investments than Bitcoin itself this year. While Bitcoin has nearly doubled in value since the beginning of the year, publicly-traded mining firms have seen their shares soar over 100% due to the rising value of BTC and positive business developments.
Marathon Digital, one of the largest public miners, has seen its shares increase by 158% year to date. Other mining companies like Iris Energy and Riot Platforms have experienced even greater gains, with their shares surging by 168% and 186% respectively.
Mining companies earn money by using powerful and expensive computer equipment to mine Bitcoin. As the value of Bitcoin rises, the dollar-denominated value of their rewards and profits also increase.
Bitcoin itself has seen a 90% increase in value in 2023, driven by a series of U.S. bank failures that shook confidence in the traditional financial system. The excitement surrounding the potential approval of a spot Bitcoin ETF has also contributed to Bitcoin's rally.
Bitcoin-adjacent companies, such as Coinbase, have higher volatility than Bitcoin itself. Coinbase, the only publicly traded crypto exchange, has seen a 129% increase in value this year.
The mining industry has taken steps to enhance its value proposition to investors. Companies like CleanSpark have made significant investments in the latest Bitcoin mining hardware, increasing their capacity to mine new BTC. These investments have also driven Bitcoin's total hashrate to new highs and reduced the cost of outdated mining hardware.
Mining companies are also diversifying their operations. Many firms have expanded into cloud computing and high-performance computing services using their existing infrastructure. These services have been claimed to be more profitable per unit of energy than Bitcoin mining.
Overall, Bitcoin mining companies have outperformed BTC this year due to the rising value of Bitcoin and their efforts to enhance their operations and diversify their services.