Sixteen Bitcoin mining companies are currently listed on NASDAQ, the American stock exchange dedicated to tech. Seven others are stamping their feet despite the decline of mining stocks which are bearing the full brunt of the fall in the crypto market.
16 mining companies listed on NASDAQ and 7 pending
Galaxy Digital Research’s latest report on Bitcoin mining activity in 2021 demonstrates the growing attractiveness of the Bitcoin mining industry.
In one year, the number of mining companies listed on the New York Stock Exchange has increased from 6 to 16 companies. Hut 8 Mining, Marathon Digital Holding, Riot Blockchain, BitFarms.Ltd, HIVE Blockchain Technologies, Argo Blockchain, Ebang International Holdings, Canaan Creative, Bitcoin Core Scientific, Bitfury Cipher Mining, Bitcoin Iris Energy, BitDigital, Stronghold Digital Mining, CleanSpark are notably on the table.
And, according to the report, seven other companies are said to be waiting for an upcoming NASDAQ IPO for the first quarter of 2022.
This eagerness of Bitcoin mining companies to go public is not trivial. Listing makes it easy to offer the indirect exposure to BTC that is increasingly sought after by institutional investors. Through the purchase of mining shares, they can satisfy their demand for investment in a rare resource considered by many experts to be akin to a precious raw material, this famous “digital gold” who would also experience his legendary rush.
Companies that have seen their revenues explode
In support of this thesis, business revenue growth mining as evidenced by the graph drawn by Beincrypto during the upward period of the price of Bitcoin.
It must be said that in anticipation of the announced bullish rally, they had prepared well by acquiring more efficient equipment and betting on capital increases via huge fundraising.
But today the bull run could be behind us and the crypto winter ahead could be harsh. And especially for bitcoin mining, subject to repeated attacks due to concerns about its energy consumption.
Last recorded offensive, that of the vice-president of the European Securities and Markets Authority (ESMA) Erik Thedéen, who purely and simply asks for the prohibition of mining proof of work as he declared to the Financial Time.
But a fragile economic model
Above all, the economic model of these companies is fragile. According to analysis by TheBlock Research, “Crypto mining is a capital-intensive business [qui contraint] operators to raise significant sums from investors on public markets”. In fact, in constant search of new funds to finance their infrastructures intended to produce ever more bitcoins, they find themselves all the more weakened when the price of bitcoin is down.
Thus, according to data from The Block Crypto Data, the market capitalization of leading companies has fallen drastically since last Novembermoment of ultimate ATH (highest peak) of bitcoin price.
Marathon Patent Group passing from $7.65 billion to around $3 billion today. Riot Blockchain from $4.25 billion to $2.05 billion. And Hut 8 of $2.33 billion to $1.19 billion.
” Public mining stocks act as a high beta play on the price of bitcoin, so when the price of bitcoin goes down, mining companies feel extra pain. Not only do most of them hold bitcoin as cash, but their ASIC fleets fluctuate in value with price. They [deviennent alors] increasingly indebted with debt denominated in USD. »
Ethan Vera, co-founder of Viridi Funds, quoted by TheBlock
A more decentralized and secure network than ever
The race to list mining companies may therefore seem a bit insane if the crypto market is heading south.
But from the perspective of the bitcoin holder, the expansion of their mining operation turns out to be very positive. Since China banned mining on its territory, there has been an overall redistribution of the global hash rate – both geographically and in terms of company diversity – which has again reached an all-time high in recent days according to Glassnode. Fact, the Bitcoin network has been able to demonstrate its robustness, it is more decentralized and more secure than ever.