Bitcoin mining stocks have surged in this new crypto bull run. Bitcoin price surged above $50,000 for the first time in over two years on Monday and analysts believe that this rally is just starting. In our base case, we expect that the coin will jump and retest its all-time high at $67,000 ahead of the upcoming halving event. A break above that level will likely see it jump to the next psychological level at $100k.
Why invest in Bitcoin mining stocks
BTC mining companies are vital players in the crypto ecosystem since they bring digital coins to the market. They mine and sell these coins to exchanges and other counterparties in the over-the-counter (OTC) market. In most cases, these firms rise when Bitcoin is rising and vice versa.
Most importantly, they tend to outperform Bitcoin in both sides. For example, while BTC jumped by more than 150% in 2023, most mining companies surged by over 300%. The view is that these companies will always make more money when the coin is rising. They also boost their balance sheets since these firms tend to have loads of Bitcoins in their balance sheets.
Marathon Digital is one of the best Bitcoin mining stocks to buy. It is the biggest company in the industry with a market cap of over $6 billion. A look at its financials shows that the company is doing well. The most recent results shows that its total revenues jumped from $12.7 million in the third quarter of 2022 to over $97.8 million in the same quarter in 2023. As a result, it managed to turn a profit, which stood at over $64 million.
Marathon Digital is also producing thousands of coins per month. It mined 1,084 coins in January and added thousands of miners, including in Abu Dhabi and Paraguay. This increase was notable since the company mind 687 coins in the same month in 2022 even as the Bitcoin mining difficulty jumped. Most importantly, it has a strong balance sheet, which is a good thing for such a company. Therefore, there is a likelihood that MARA stock price will continue doing well this year.
CleanSpark (CLSK) is another good Bitcoin mining stock to buy. It is a giant company that is boosting its mining capacity and its revenues. Its revenue surged from $27.8 million in Q1’24 to $73.8 million. This jump happened because of an increase in the number of coins it mined and the price that jumped. Like MARA, the company also turned a profit, making over $25.8 million in the quarter.
This revenue growth was because of higher BTC prices and more production. It also ended the year with a strong balance sheet with $229 million in liquidity, which is made up of $62.5 million in cash and over 3,700 coins.
The other great Bitcoin mining stock to buy is Cipher Mining (CIFR), which has a market cap of more than $861 million. It is a giant company that mined about 371 coins in January and the management expects to boost this trend in the coming months. The company has a strong balance sheet and a history of good performance when Bitcoin is in a bull market. It has jumped by over 180% in the past 12 months.
How will halving affect Bitcoin mining companies?
On Monday, I wrote about how halving will affect Bitcoin mining stocks. In that article, I noted that these firms will be affected since the number of coins that they mine every day will be slashed into half. However, most of them have spent years preparing for this eventuality and it will not be a surprise. They have done that by investing in new mining equipment.
Most importantly, a look at history shows that Bitcoin price tends to be much higher in between halving events. This means that the rising price will likely offset a decline in mine production.