Bitcoin mining stocks plummet
In a tweet thread by Arcane Research analyst Jaran Mellerud on Wednesday (May 11, 2022), data showed that five of the largest mining stocks are down market capitalization suffered a slump, with year-to-date (YTD) losses of more than 50%. .
Marathon Digital Holdings is down 62% year-to-date, with Hut8 a step up at 63%. According to Arcane Research data, Riot suffered the largest YTD loss at 65%.
According to Mellerud, one reason for the losses is that most crypto mining companies hold Bitcoin, meaning they are affected by the value of BTC. The largest cryptocurrency by market capitalization has since ATH lost more than 60% of their value in November 2021. Right now, BTC is struggling at $26,000 as it has fallen by $14,000 over the past week.
Meanwhile, the BTC price drop has consequently resulted in less revenue for mining companies. Mellerud noted that while a fall in the price of bitcoin could also have caused the global hash rate to fall, the situation in 2022 is different. As recently reported, the hash rate recently hit a new all-time high.
According to the analyst, BTC’s price drop and a rising global hashrate has caused companies to mine less Bitcoin. Mellerud added:
“Most of these companies have not increased their hashrate as quickly as investors had hoped. Investors may have adjusted their growth assumptions for these companies to more conservative territory.”
Hive wants to attract institutions with planned stock consolidation
Meanwhile, Canadian crypto miner Hive Blockchain announced plans to consolidate its common stock five-to-one. According to a press release, the move will reduce the number of common shares issued and outstanding from 411,209,923 to 82,241,984 while increasing the company’s share price.
The stock consolidation is expected to attract more institutional investment. A statement from Hive CEO Frank Holmes reads:
“Although HIVE has a larger market cap than many of our peers and stronger fundamentals as measured by price-to-earnings, revenue per employee and debt-to-equity ratio, the increased share price creates greater institutional visibility as many of its fundamental screens do exclude stocks under $5 per share.”
Post consolidation, the common shares are expected to trade on both the TSX and Nasdaq by May 20, 2022, subject to regulatory approval. In early March, Hive struck a supply agreement with Intel to purchase new ASIC mining chips.
Source: Crypto News Deutsch