Introduction
Bitcoin mining stocks have long been correlated with the price of Bitcoin, making them an attractive option for investors who seek exposure to Bitcoin's growth potential without holding the cryptocurrency directly. This report analyzes the performance of Bitcoin mining stocks compared to Bitcoin itself for the first half of 2024.
Methodology
To evaluate the performance, we analyzed 19 Bitcoin mining companies listed on US exchanges (NASDAQ and NYSE). These companies were weighted according to their free float values, calculated as:
Free Float Value=Share Price×Free Float Shares
Only U.S.-listed miners actively engaged in Bitcoin mining as their primary business were included. Companies such as Phoenix Group, Northern Data AG (NB2), Argo Blockchain (ARBK), DMG Blockchain Solutions Inc. (DMGI), and Digihost Technology Inc. (DGHI) were excluded due to insufficient data. Similarly, ASIC manufacturers like Canaan (CAN) and Ebang (EBON) were excluded due to the lack of operational updates.
Comparative Performance
If an investment comparison was made starting January 1, 2024, with an initial amount equivalent to 1 Bitcoin ($44,957.97). The investments are distributed equally among Bitcoin, the WGMI ETF, and a hypothetical "Bitcoin Mining Stock Index."
Key Insights
- Major Influencers: The performance of the Bitcoin Mining Stock Index is heavily influenced by major companies such as Marathon (MARA), CleanSpark (CLSK), Riot, IREN, Hut 8, Core Scientific, TeraWulf, Cipher, and Bitfarms.
- ETF Comparison: WGMI, an actively managed ETF on Nasdaq, invests in public companies within the Bitcoin mining industry. Despite WGMI's inclusion of diversified tech companies like NVIDIA and Taiwan Semiconductor, the ETF's performance closely mirrored that of our Bitcoin Mining Stock Index, given the significant weight of Bitcoin miners.
- Market Performance: During the first half of 2024, the performance of Bitcoin mining stocks and the WGMI ETF lagged behind Bitcoin itself. This underperformance can be attributed to market uncertainties and perceptions leading up to the Bitcoin halving event. However, as Bitcoin miners expand their operations and increase their hash rate, market confidence is gradually returning.
- Future Outlook: Historical trends suggest that during bull markets, the performance of Bitcoin mining stocks could potentially surpass that of Bitcoin. However, this is a speculative assumption and should not be taken as investment advice. Investors are encouraged to conduct their own research before making investment decisions.
Conclusion
Bitcoin mining stocks offer an alternative route for investors to gain exposure to Bitcoin's growth. While they have underperformed Bitcoin in the first half of 2024, there are indications of recovery. As market confidence grows, particularly post-halving, Bitcoin mining stocks may present significant growth opportunities in bullish markets.
Disclaimer: This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult with financial advisors before making investment decisions.
