Significant differences in valuation of bitcoin mining stocks
Mining stocks continue plummeting, but we can still see significant discrepancies in their valuations.Mining stocks continue plummeting, but we can still see significant discrepancies in their valuations.
We can compare the valuations of mining companies using industry metrics like Price/Hashrate or general metrics like Price/Sales (P/S). Most publicly listed miners have similar cost levels. Therefore, sales is a valid proxy for earnings, which makes P/S an excellent metric for the industry.
A miner’s hashrate is their capacity to mine bitcoin. Therefore, Price/Hashrate considers future earnings, and we can view it as a simplified version of the Forward Price/Earnings ratio.
Marathon has the highest valuation measured by Price/Hashrate and P/S. The company was valued even higher than its peers before bitcoin mining stocks started tumbling in November.
Marathon has a current hashrate of 3.5 EH/s, which make up around 2% of Bitcoin’s total hashrate. They aim to increase their hashrate to 13.3 EH/s in July 2022, corresponding to a hashrate growth of 280% in just seven months. These extreme growth prospects partly explain why the Marathon stock is priced much higher than its peers.
On the lower end of the list sits Hive, with a P/S of 4.2, indicating that investors are not expecting Hive to have a similar growth as Marathon and Riot.
