The stocks of crypto mining companies, which are heavily exposed to the prices of the crypto currencies they mine, surged on Monday after the price of bitcoin approached record highs and ether, the native token for Ethereum, hit an all-time-high.
- Among the crypto miners, Marathon Digital led the surge on Monday, with the stock soaring almost 20%, while peer Riot Blockchain climbed 17%.
- Other miners such as Bit Digital, Bitfarms, Hive Blockchain, Hut 8, Cleanspark, Sphere 3D and Greenidge Generation each rose more than 10%. Meanwhile, Stronghold, Argo and Cipher’s shares were each up more than 5% each.
- The share price of miners are most leveraged to the price of cryptocurrencies, since their main source of revenue comes from mining the coins and holding them on their balance sheets.
- With bitcoin prices climbing above $60,000, miners big and small continue to make profits, leading to a surge in capital flowing into the sector and more companies delving into mining.
- “With current BTC mining margins north of 90%, capital is aggressively flowing into the sector, which we expect to make BTC mining more institutionalized,” said BTIG analyst Gregory Lewis in a research note.
- Moreover, Lewis highlighted that the breakeven cost, in terms of electricity, for miners can range from anywhere between $5,000 to $14,000 per bitcoin, implying a heightened profit margin level for miners minting coins at current bitcoin prices.
- To put the profitability margin in context, one of the largest bitcoin miners, Marathon Digital, said in a September presentation that their mining cost is about $5,612 per bitcoin, with margin of about 85%, when all of their mining rigs get deployed.
- Another crypto-linked stock, MicroStrategy Inc., which is often seen as a proxy for bitcoin, climbed about 9%, while crypto exchange Coinbase Global gained 7% and Robinhood Markets, where many users trade crypto, was mostly flat on Monday.