Oct 4th 2021
Significant differences in valuation for mining companies
In week 35, we explained that mining stocks can be an alternative way to get exposure to bitcoin. This week we highlight the big differences in valuation between the publicly listed mining companies.
Table source: Company websites, Yahoo FInance. Chart source: Tradingview
We can compare the valuations of mining companies using industry metrics like Market Cap/Hashrate or general metrics like Price/Sales (P/S). Most publicly listed miners have similar cost levels. Therefore, sales is a valid proxy for earnings, which makes P/S an excellent metric for the industry.
A miner’s hashrate is their capacity to mine new bitcoin. Therefore, Market Cap/Hashrate considers future earnings, and we can view it as a simplified version of the Forward Price/Earnings ratio.