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Bitcoin Miner Stocks: Exit Or Ride The Wave?

Bitcoin Miners Report, November 2024

Ecoinometrics

Nov 13

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If you've been following the miners with us, it's been a long wait (1.5 years and counting).

We've seen some opportunities, periods of outperformance, and plenty of volatility. But nothing has matched our expectations for the miners thesis yet.

Now, with Bitcoin approaching six figures, we might finally have the conditions to test if our miners thesis holds true.

The key question: should you exit at the first opportunity or ride the wave? Let's analyze.

The Ecoinometrics newsletter gives you insights from crypto and macro data to help you make better investment decisions.

We spend hours every day gathering data, creating metrics and bringing them to life with data visualizations that allow you to quickly get to the heart of things.

We then distill all that knowledge in each issue of the newsletter with less words and more charts so that you get insights, direct to the point, in five minutes or less.

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Done? Thanks! That’s great! Now let’s dive in.

Bitcoin Miner Stocks: Exit Or Ride The Wave?

The Bitcoin miners thesis is simple.

The profitability of the Bitcoin mining companies strongly depends on Bitcoin's price. That make the Bitcoin miners stocks closely tied to BTC and thus good proxies for getting exposure to the Bitcoin market.

At the same time those miners stocks are small. Much smaller than Bitcoin. So capital inflows in the miners market tend to create outsized returns.

The investment thesis is that in the coming bull market, the institutional money will want to own Bitcoin miners stocks in order to get exposure to BTC. The buying pressure coming from that demand will make it so that the Bitcoin miners stocks will deliver returns that are several times larger than Bitcoin itself over the same period.

This is the bet we are tracking in our monthly miners report.

The Takeaway

Bitcoin miners are at a pivotal moment as Bitcoin approaches six figures. Our correlation analysis shows miners starting to outpace Bitcoin's gains since September, suggesting our long-term thesis might finally play out.

For investors looking to exit, several major miners have reached attractive mean reversion levels.

For those willing to hold, current market conditions hint at the potential for significant outperformance.