Crypto News- Marathon Digital Holdings and Cipher Mining have posted impressive year to date gains, with Marathon Digital Holdings showing a 120.67% increase and Cipher Mining leading the pack with a remarkable 356.00% gain. These mining stocks have displayed a higher beta compared to Bitcoin, which indicates that they are more volatile and tend to move with greater magnitude in the same direction as Bitcoin or the broader market benchmark.
Most Mining Stocks Outperform Bitcoin in 2023
During the first half of this year, when Bitcoin was experiencing a bullish trend, these mining stocks often outperformed Bitcoin during positive rallies. Conversely, during the third quarter when Bitcoin faced a downturn, most mining stocks retraced by an average of 50%, while Bitcoin’s price dropped by around 10%. In addition to their higher beta, these mining stocks have also enjoyed increased revenue from Bitcoin mining, largely due to the growing usage of Ordinals.
Ordinals are digital files stored on the smallest unit of Bitcoin, the satoshi, and they’ve introduced something akin to an NFT market on the Bitcoin blockchain. This innovation has contributed to the profitability and demand for mining.
Rich Rines, an initial contributor to Core DAO, pointed out that mining companies, after facing significant challenges in 2022, are now taking advantage of the renewed excitement surrounding Bitcoin and its improved market performance. He also noted that new use cases like Ordinals inscriptions and BRC-20 tokens are further bolstering the profitability and demand for mining.
Anthony Power, a mining analyst at Compass Mining, mentioned in a recent report that public miners saw increased production and greater mining revenues in September. This was primarily due to the rise in Bitcoin’s price and a temporary negative adjustment in mining difficulty.
Mining difficulty is an automatic parameter in Bitcoin’s design, determined by the network’s total mining power, represented by hashrate. Difficulty increases when blocks are mined too quickly, typically due to a higher hashrate, and it decreases when it takes longer than 10 minutes to mine a block.
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