Halving came early for mining stocks
Major mining stocks down 50% in Q3. Thank God Uptober is here.
Over the past quarter, bitcoin rallied to year-to-date highs of around $31,000 in mid-July before retreating to as low as $25,000 and closing at $27,000 on Friday. Bitcoin mining stocks, on the other hand, experienced much higher volatility, strengthening their position as a leveraged trade on bitcoin.
The table below from TheMinerMag outlines the performance of 12 major mining stocks this year as of Sept. 29. Each of these stocks reached YTD highs in mid-July, along with bitcoin and the Nasdaq index. At the time, they had all sharply outperformed bitcoin. But since then, bitcoin and the Nasdaq index have dropped by 14% and 8%, respectively, as of Friday. Mining stocks have hence experienced a turbo-charged sale, declining an average of 50%.
Such volatility also coincided with the rise of equity financing – and hence share dilution – by public mining companies to fuel growth plans as halving draws closer and bitcoin’s hashprice continues to squeeze.
But if one is to believe in bitcoin’s long-term growth, then mining stocks could bring outsized potential. The question boils down to choosing the right mining operations: the ones with the lowest costs, highest fleet efficiency, healthiest balance sheet, and who have a track record of actually delivering on promises.
The good news is Uptober is here! Over the weekend, bitcoin has already regained $28,000 and mining stocks are poised to catch up after markets open in the U.S.
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