With an increase of 800%! Riding on the wave of Bitcoin's skyrocketing, shares of cryptocurrency miners like Marathon soar

Zhitong App has learned that the stocks of Bitcoin miners such as Marathon Digital (MARA.US) and Riot Platforms (RIOT.US) have outperformed Bitcoin, with gains of over 800% and 400% respectively this year. At the same time, the US cryptocurrency exchange Coinbase (COIN.US) and enterprise software company MicroStrategy (MSTR.US), which bet on Bitcoin, have also seen gains of over 350% during the same period. Bitcoin itself has risen by about 160% in 2023.

Bitcoin mining is an energy-intensive process where miners use specialized computers to verify transactions on the Bitcoin blockchain and receive rewards.

Cryptocurrency mining stocks outperform Bitcoin

As the price of Bitcoin soars, digital asset mining companies are expanding their operations to increase Bitcoin production. These companies expect a significant increase in demand for this cryptocurrency if the US regulatory authorities approve the trading of Bitcoin exchange-traded funds (ETFs). Bloomberg Intelligence analysts predict that the US Securities and Exchange Commission (SEC) will approve the first Bitcoin ETF in the next two weeks.

Riot Platforms recently announced the purchase of a large number of mining machines. Bitcoin mining giant Marathon has acquired new equipment to improve its mining efficiency, marking a significant shift in its long-standing strategy as a light-asset mining company.

Brian Dobson, Managing Director of Stock Research at investment bank Chardan, said, "Marathon Digital announced the acquisition of a new mining facility last week, which could improve mining efficiency metrics." "This is a concern for investors."

Marathon's stock price has risen for 11 consecutive trading days, more than doubling during this period to $31.07. When Bitcoin reached its all-time high in November 2021, the stock traded at over $80.

Ihor Dusaniwsky, Managing Director of Predictive Analytics at S3, said that if the upward trend continues, mining stocks may face more buying pressure and short squeeze, further driving up stock prices.

Like most cryptocurrencies, after a series of industry scandals and bankruptcies (such as the collapse of the FTX exchange), most cryptocurrency stocks were at their lowest prices of the year in early 2023, making them popular betting targets.

"The price movement is not due to short covering, but rather due to buying pressure from long positions," Dusaniwsky said. "Marathon has a short squeeze ratio of 100/100, and if its stock price continues its recent trend, we should see more short covering and clear short squeeze." The CoinShares Blockchain Global Stock Index rose by 29% in December, marking its best month on record.