Mining companies have been seeing their shares rise sharply in recent days. Yesterday, the stock prices of companies such as Canaan Inc, Marathon Group and CleanSpark rose more than 25%, almost the same as bitcoin in an entire month.
Others, with better annual returns, have increased their prices at almost 90% or more, such as Hut 8 Mining or Iris Energy. Impressively outperforming the rest in annual timing, TeraWulf stock rose more than 250%.
These figures indicate that what is happening with the shares of cryptocurrency mining companies You should care, a lot, if you want to take full advantage of the Bitcoin price feat.a currency that elevates the rest of the market to its heights.
Why are shares of mining-related companies rising?
The recent rise in the price of Bitcoin above its all-time highs and up to close to USD 90,000 has had a significant impact on the industry, impacting the entire system that surrounds it: altcoins, tokens and the companies and projects behind them. , such as exchanges and wallets. Also to the shares of mining companies and mining equipment manufacturers.
When the price of Bitcoin rises, mining becomes a more profitable activity. This is because miners receive rewards in bitcoin for validating transactions and processing blocks; The higher the price of bitcoin, the higher the dollar rewards for miners.
Companies that mine bitcoin therefore increase their profits, which makes the shares of these companies a more attractive investment. This attracts more buyers of shares, whether they are new or shareholders who want to buy more; Consequently, the share price increases.
Companies that manufacture mining equipment experience a similar process. If bitcoin mining becomes more profitable, the demand for mining equipment increases. AND It is these manufacturing companies who sell the equipment. The more sales, the higher income and profits, and the higher the price of its shares.
With higher profits, mining-related companies can distribute more dividends to shareholders. The dividends are installments of money obtained from business profits distributed among shareholders. Dividends increase the attractiveness of a stock, and therefore its demand and price.
Companies with higher profits can reinvest them in their own growth, which helps improve the company’s future prospects. This raises the price of the shares because the value of the participation in a company that will grow in the future is greater.
Some advantages of investing in shares of mining companies
- They expose you to the stock market. They allow you to diversify from cryptocurrencies, sometimes too volatile, using a more stable investment medium (it goes down less and goes up less).
- They are safer investments than most altcoins. Those listed on the stock market They are public and regulated companies. The risk of them disappearing is much lower than that of some altcoins that have just entered the market, and whose creators are anonymous.
- They secure the Bitcoin network. Mining companies work by and for bitcoin. They produce BTC with each mined block, which allows the network to continue its operations and for you to use it fluidly, with reasonable confirmation times If mining companies as a whole do well, bitcoin will do well too.
- They are more predictable. If the price of bitcoin is in a bullish rally, shares of mining companies tend to riseespecially if they are healthy companies with a good reputation (do your own research). Above all, now, that the future of mining is well seen from the United States. Guided by bitcoin price cycles, you can learn to spot an opportunity in investing in mining company stocks.
We must begin, therefore, to turn towards the actions of mining companiesprobably the investment vehicle least taken into account by bitcoiners, traders and investors on this side of the market. Everyone knows altcoins; They are the most direct investment after bitcoin, and most know how dangerous they can be.
I then refresh you on the advantages of investing in mining stocks: they help diversify, they can pay dividends, they are safer and more stable investments, they strengthen the Bitcoin network and they are more predictable as investment instruments than altcoins.
Disclaimer: The views and opinions expressed in this article belong to its author and do not necessarily reflect those of CriptoNoticias. The author’s opinion is for informational purposes and under no circumstances constitutes an investment recommendation or financial advice.
