Bitcoin mining stocks have continued to fall so far in 2022 following the nosedive in BTC price, with Riot Blockchain being the biggest loser.
Bitcoin Mining Stocks Drop
in a tweet thread by Arcane Research analyst Jaran Mellerud on Wednesday (May 11, 2022), data showed that five of the largest mining stocks by market capitalization fell, with year-to-date (YTD) losses of more than 50 %.
Marathon Digital Holdings is down 62% YTD, with Hut8 one step higher at 63%. According to data from Arcane Research, Riot suffered the largest loss to date at 65%.
Part of the reason for the losses, according to Mellerud, is that most crypto mining companies hold bitcoin, meaning they are affected by the value of BTC. The largest cryptocurrency by market cap has lost over 60% of its value since the ATH in November 2021. Right now, BTC is struggling at $26,000, having dropped $14,000 in the last week or so.
Meanwhile, the falling price of BTC has consequently led to less revenue for mining companies. Mellerud noted that while a drop in the price of bitcoin could also have caused a decline in the global hash rate, the situation is different in 2022. As recently reported, the hash rate recently recorded a new all-time high.
According to the analyst, the drop in the price of BTC and the increase in the global hash rate have caused companies to mine less bitcoin. Mellerud added:
“Most of these companies have not increased their hash rate as fast as investors expected. Investors may have adjusted their growth assumptions for these companies to more conservative territories.”
Hive to attract institutions with planned stock consolidation
Meanwhile, Canadian crypto miner Hive Blockchain announced plans to consolidate its common shares five to one. According to a press release, the move will reduce the number of issued and outstanding common shares from 411,209,923 to 82,241,984 while increasing the company’s share price.
The stock consolidation is expected to attract further institutional investment. A statement from Hive CEO Frank Holmes said:
“Although HIVE has a higher market capitalization than many of our peers and stronger fundamentals as measured by P/E ratios, revenue per employee and debt-to-equity ratios, the rise in share price creates more institutional visibility because many of their fundamental screens exclude stocks below $5 a share.”
The post-consolidation common shares are expected to begin trading on both the TSX and Nasdaq exchanges on May 20, 2022, following regulatory approval. Earlier in March, Hive signed a supply agreement with Intel to purchase new ASIC mining chips.
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This post Share Prices of Bitcoin Mining Firms Fall Amid Wider Market Downturn
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