Bitcoin mining stocks can reap high profits amid larger consolidation

Bitcoin mining stocks can reap high profits amid larger consolidation

After the Bitcoin ETF approval, a general heightened interest in Bitcoin investments had been noted. While BTC’s new ATH alongside the positive headlines that the king coin garnered have already strengthened the narrative for the top coin, for the past couple of weeks Bitcoin’s momentum had been rather sideways. However, Bitcoin mining stocks have seemed to rally even as BTC consolidates.

Investing in BTC mining stocks might be an unconventional way of investing in Bitcoin as highlighted in a previous article. However, now since BTC seems to be performing rather well over the last month, activity and volumes in BTC mining stocks have soared too.

So, here’s how one could take a break from BTC trading and look at Bitcoin mining stocks to reap some profits.

Mining companies outperforming

With Bitcoin consolidating after an ATH, seemed like participants turned their eye towards BTC mining stocks. Notably, mining companies, including Marathon Digital and Hut 8, outperformed other crypto-linked stocks on Tuesday, as economics for the miners continued to glimmer.

Since the market has already had seven positive difficulty adjustments in a row over the last three months, it indicated the return of hash and miners, backed by the improving hash rate, mining firms added to their BTC HODLings.

In fact, over the last few days, mining stocks were up across the board. Notably, Hut 8 Mining’s value rose by almost 80% since September 21.

While CleanSpark, Canaan, and Marathon saw some impressive gains too. Meanwhile, as per data from Glassnode, Bitcoin network’s hashrate, dropped to about 153 EH/s from as high as 185 EH/s in October. Generally, a drop in hashrate alongside while prices rallying, signifies that miners are making more profit from mining the coins.

Activity and revenue booming

Bitfarms recently reported that its October bitcoin production increased to 343 from 305 in September and expects to boost its hashrate to 3 EH/s in Q1 2022 and 8 EH/s by the end of next year.

Additionally, Marathon’s mining fleet produced approximately 2,516 self-mined BTC during 2021. Producing 417.7 self-mined bitcoins during October 2021, the firm increased total BTC holdings to approximately 7,453 with a fair market value of approximately $457.4 million.

DA Davidson analyst Christopher Brendler had also estimated in a recent research that for miners such as Marathon Digital, the gross margin, or profit after operating costs, will be about 89.6% in 2021 and 90.8% in 2022.

All in all, while Bitcoin mining stocks seem a good strategy to enter the market with less risk attached this too would ultimately need a lot of self-research. Nonetheless, with crypto mining stocks surging it does seem like a good investment option.

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