Bitcoin News, Crypto Mining

Why Did Bitcoin Mining Stocks Beat The Price Of BTC In 2021?

When it comes to returns on investment, Bitcoin (BTC) may have surpassed traditional financial markets, but cryptocurrency has always lagged behind Bitcoin-related businesses. BTC’s price has risen almost 290 percent in the last year, from $ 10,695 to well over $ 42,000. Marathon Digital Holdings (MARA), one of the top crypto mining businesses in North America, had its stock rise 1,641 percent within the same time period.

Institutions operate the pump. In terms of annual returns, more and more cryptocurrency mining businesses are outperforming BTC spot pricing. Bitfarms (BITF), located in Canada, increased by 1,736 percent in a year, while Hut 8 Mining (HUT) and Riot Blockchain (RIOT) increased by 1,010 percent and 913 percent, respectively.

Mining stocks are the “natural pick,” according to Nick, the creator of Econometrics, a crypto-focused newsletter service because they provide institutional investors with indirect exposure to the Bitcoin markets. Morgan Stanley made the claims after announcing in its regulatory filings that it had more than quadrupled its exposure to Grayscale Bitcoin Trust (GBTC), a conventional digital asset investment vehicle. Morgan Stanley Europe Opportunity Fund held 58,116 shares of Grayscale Bitcoin Trust as of July 31. (GBTC). 

Cathie Wood’s Ark Invest purchased over 450,000 GBTC shares for $ 1.4 million in July. These investments have demonstrated a surge in institutional interest for crypto-centric but traditional investment products, similar to the success of mining stocks. Investors will continue to pour money into crypto-mining companies until they see a credible alternative, such as a US-based exchange-traded fund, Nick added.

Holding and scaling the market for mining stocks is rising as most firms concentrate on two key objectives: growing and holding. Marathon, for example, stated in its unaudited August report that it got 21,584 top-tier Bitcoin mining ASICs from Bitmain in 2021, with 5,916 more presently in transit.

As a consequence, by the middle of next year, the business expects to have at least 133,000 Bitcoin mining equipment operational. Marathon said that it currently possesses 6,695 bitcoins, including the 4,812.66 bitcoins it bought in January 2021. As a result, Marathon’s existing bitcoin holdings are now worth roughly $ 333.4 million, providing the firm with enough money to expand production in the future.

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