Mining Stocks Outpace Bitcoin

A new report shows that most of the top eleven mining stocks have outperformed BTC. Nine of these stocks have posted gains of over 100% since January. Bitcoin, on the other hand, is up 70% this year, according to data from CoinGecko.

Mining firms whose stocks have recorded gains lower than Bitcoin are TeraWulf and Argo Blockchain. The latter’s stock is up 45%, while the former’s has surged 63%. Cipher Mining and Northern Data AG have seen the most gains this year, surging 355% and 293%, respectively.

Mining stocks have been outperforming Bitcoin every time the coin rallies. For instance, during the first three months of this year, when BTC moved from $17,000 to $28,000, posting a 60% growth, most mining stocks rose by more than 150%.

Why Investor Interest in Mining Stocks is Growing

Interest in mining stocks has grown this year due to rising Bitcoin mining revenue, thanks to increased network activity spiked by Ordinals. For starters, Ordinals is a Bitcoin-based protocol that allows users to inscribe unique digital assets on the oldest blockchain. Over 500,000 NFTs have been added to Bitcoin since February.

Compass Mining researcher Anthony Power published a report last month that indicated an increase in mining revenue in September. The growth was attributed to increased BTC’s price and reduced mining difficulty that month. Mining difficulty measures the ease at which miners mine new blocks. The higher the mining difficulty, the harder it is for miners to mine blocks as they require more hashrate, making mining an expensive venture.

Mining Companies Prepare for Bitcoin Halving

Power’s report indicates that Bitcoin miners have been cashing in most of their BTC rewards to buy more mining machines as they prepare for the halving set to occur in the second quarter of next year. Bitcoin halving is an event that happens every four years in which mining rewards are reduced by 50%. So, for miners to achieve their pre-halving profits, they need to add more mining equipment to increase computational power.

Meanwhile, prominent cryptocurrency trader Oliver Velez expects mining stocks’ value to reduce after the halving event.