Since 2023, the crypto market has mostly trended upwards, with only a few minor setbacks. The largest cryptocurrency by market capitalization, Bitcoin, rose from $16,000 to a peak of $73,750. Currently, BTC remains at a high price level, trading around $67,000. It's no surprise that this performance has positively impacted the stocks of Bitcoin-related companies. A prime example is MicroStrategy (MSTR), whose stock has surged by an impressive 1,250% over the past five years, being seen by investors as a leveraged play on the price of Bitcoin.
Publicly traded mining companies have also performed well. Over the past year, most mining stocks have delivered gains to their investors. Marathon Digital Holdings, based in Las Vegas, boasts a return of 45%, Hut 8 (HUT) has seen a remarkable 310% increase, and Bitfarms (BITF) has grown by 50%. Despite some exceptions, like Riot Blockchain (RIOT), which saw its stock decline by around 38%, the mining industry has generally held its ground in the traditional financial market.
According to Hashrateindex, the top 25 mining stocks by market capitalization have seen significant growth, with their index rising from 3,500 to nearly 5,200 points over the past year.
MARA, RIOT, HUT, and Others: The Real State of Major Bitcoin Miners
At first glance, the double-digit growth figures appear impressive. However, to gain a holistic view of the financial health of these mining companies, the price-to-earnings (P/E) ratio is also important.
The P/E ratio measures the relationship between a company's stock price and its earnings per share. A low but positive P/E ratio indicates a company that generates high profits relative to its current valuation and may be undervalued. Conversely, a company with a high negative P/E ratio is experiencing significant losses relative to its current valuation.
For example, Riot Blockchain has a P/E ratio of -7.26, Hut 8 is at -40, Bitfarms at -5, and even Marathon shows a negative P/E ratio of -6.19, according to Companiesmarketcap. This indicates that while the stock prices of mining companies are soaring, companies like Marathon are still facing significant challenges.
