Bitcoin mining stocks have outperformed BTC by 455% in the past 12 months

Despite the losses of the major publicly traded Bitcoin mining companies, their stock prices have significantly outperformed BTC over the past 12 months.

Appearing on CNBC, Fundstrat’s vice president of digital asset strategy Leeor Shimron shared his analysis of the market performance of the four largest publicly traded mining companies – Marathon Digital Holdings, Riot Blockchain, Hive Blockchain and Hut 8, each of them represents a market capitalization of over $ 1 billion.

Over the past 12 months, Shimron has found that the average return on shares of mining companies is 5,000%, while BTC has gained 900% over the same period. Unsurprisingly, stocks turned out to have a “high positive correlation” with BTC.

The researcher concluded that for every 1% price movement in BTC, Bitcoin mining stocks move 2.5% on average. However, the observation applies to both upward and downward price movements, meaning mining stocks are expected to fall with more than twice the aggression of BTC in bearish market conditions.

“They will likely be hit hard as Bitcoin goes down,” he said.

Shimron attributed the savage volatility of mining stocks to the lack of regulated crypto investment products in the United States, speculating that “until a Bitcoin ETF is approved, investors may view state-owned mining companies as one. the only way to get exposure to Bitcoin. ”

“Since the main source of income is Bitcoin, these companies are inherently long [on] industry – so investors are essentially making a ‘dime’ when it comes to investing in miners. “

Noting that Coinbase shares “are trading at a valuation of around $ 100 billion in private markets,” Shimron added, “It is clear that investors are keen on exposure to operators in the crypto space, and miners are just another segment of that. ”

Shimron also noted that supply chain disruptions amid the coronavirus pandemic have benefited the four largest mining companies – which were able to source next-gen hardware, like Bitmain’s Antminer S19 series. .

“They have made a huge capital investment and are operating at a loss to position themselves for the current bull run,” he said, adding:

“By strengthening their cash rate capacity and increasing their operating leverage, they effectively protect themselves from competition between new miners. So they increased their economies of scale to keep their market share, and I think that should pay dividends going forward.