The performance on stock exchanges exceeds even what Bitcoin has achieved. Analysts consider that it is risky to buy these types of shares.
Bitcoin mining companies are appreciating thanks to the rise of the pioneering cryptocurrency as a digital asset. In the stocks of companies like Canaan, Ebang, Bitfarms, Marathon, and Riot Blockchain, there is an expansion that could continue in the upcoming months.
Stock markets have made such high returns, in percentage terms, which they even exceed that of Bitcoin. According to a report from Fundstrat, the shares of Riot Blockchain have soared 8,000% in the last year. That contrasts with Bitcoin’s 525% gain, according to the market research firm.
Riot Blockchain shares on the Nasdaq market were trading at USD 3.50 in November 2020. However, the price peaked at USD 77.90 per unit in February this year. That indicates the interest that these shares have aroused in investors.
The “Digital Rush” Leads Bitcoin Mining Equipment Manufacturers to Appreciate
“Over the past year, [those stocks] greatly outperformed Bitcoin, which accelerated as it exceeded the all-time high at USD 20,000. We expect this dynamic to continue as the bullish market develops,” said Leeor Shimron, vice president of strategy digital assets at Fundstrat.
The share appreciation of the Chinese manufacturer Canaan is also a consequence of the “digital gold rush”. In November of last year, people could buy a share of this company for USD 2.11. However, the price rose to USD 36.40 in March of this year.
In the last year, the behavior in the rest of the cases has been as follows: Ebang’s share price has fluctuated between USD 4 and USD 11.7; Bitfarms has shown a jump from 0.40 Canadian dollars (CAD) to CAD 6.30, and Marathon went from USD 0.45 per share to USD 47 per unit.
The Revaluation of Shares Is Tied to the Price of Bitcoin
The report from Fundstrat indicates that the price of Bitcoin is driving the price of shares as a collateral effect of its boom. Stocks have risen rapidly in the bullish market, but analysts predict the opposite to occur when the bearish market hits.
According to the market research firm, buying shares of this type involves risks, as if they were cryptocurrencies. Also, Fundstrat noted that mining companies have seized the opportunity to upgrade to more efficient equipment with greater processing capacity.
Bitcoin mining equipment manufacturers Bitmain, Whatsminer, Canaan, and Ebang account for 95% of that market. Publicly traded companies related to digital mining do not only include manufacturers. Besides, some companies directly mine the cryptocurrencies that they have developed themselves.
According to a study by the University of Cambridge, China currently concentrates 65% of Bitcoin mining on a global scale. That Asian country precedes the United States (7.2%), Russia (6.9%), and Kazakhstan (6.1%). That reflects the growing relevance of the first cryptocurrency in the economy of the largest countries in the world.
By Alexander Salazar
