We are pausing updates of this story because the crypto market has slid so much that not enough companies meet our minimum requirements for size and liquidity.
The cryptocurrency industry is still young but growing rapidly. Cryptocurrencies are a relatively new form of digital currency, with Bitcoin being the most well-known example. Cryptocurrencies utilize blockchain technology, which makes possible the maintenance of a secure and decentralized record of transactions without the need for a trusted third party.
Cryptocurrency mining companies use computers to solve complex computational problems to validate transactions on a blockchain and generate new cryptocurrency coins. Cryptocurrency can then be held and used for certain transactions or be sold for fiat currency. Some of the big names in the crypto mining industry include Riot Blockchain Inc., Canada-based HIVE Blockchain Technologies Ltd., and Marathon Digital Holdings Inc.
Crypto mining stocks, as represented by an exchange-traded fund (ETF)—the Amplify Transformational Data Sharing ETF (BLOK)—have dramatically underperformed the broader market. BLOK has provided a total return of -51.5% over the past 12 months, well below the S&P 500’s total return of -10.7%.
Below, we look at the top three crypto mining stocks with the best value, the fastest growth, and the best performance. The market performance numbers above and all statistics in the tables below are as of Sept. 13, 2022.
Best Value Crypto Mining Stocks
These are the crypto mining stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in the early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales eventually could produce more profit when it achieves (or returns to) profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.
|Best Value Crypto Mining Stocks|
|Price ($)||Market Capitalization (Market Cap) ($M)||12-Month Trailing P/S Ratio|
|Canaan Inc. (CAN)||3.25||557.4||0.6|
|Hut 8 Mining Corp. (HUT)||2.03||353.6||2.0|
|HIVE Blockchain Technologies Ltd. (HIVE)||4.55||374.2||2.6|
- Canaan Inc.: Canaan is a China-based technology company that provides high-performance computing solutions. It is focused on computing chip design, chip research and design, computing equipment production, and software services. The company supplies computing equipment to the crypto mining industry. On Aug. 18 the company reported Q2 2022 earnings results. Net income more than doubled as revenue increased 52.8% year-over-year (YOY), driven by substantial gains in mining revenue and improvement in products revenue.
- Hut 8 Mining Corp.: Hut 8 Mining is a Canada-based company that's engaged in digital asset mining, high-performance compute hosting, and other related operations. Hut 8 reported earnings for Q2 2022 on Aug. 11. Net losses widened significantly YOY as total revenue climbed by 30.7%. The net loss for the quarter was impacted by a non-cash revaluation on digital assets.
- HIVE Blockchain Technologies Ltd.: HIVE Blockchain Technologies is a Canada-based cryptocurrency mining company focused on linking the blockchain sector to traditional capital markets. It mines digital currencies such as Bitcoin and Ethereum at its data centers in Canada, Sweden, and Iceland.
Fastest Growing Crypto Mining Stocks
These are the cryptocurrency mining stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors to identify companies that are able to grow revenue organically or through other means and to find growing companies that have not yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share (EPS). However, sales growth can also prove potentially misleading about the strength of a business because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability.
|Fastest Growing Crypto Mining Stocks|
|Price ($)||Market Cap ($M)||Revenue Growth (%)|
|Riot Blockchain Inc. (RIOT)||7.63||1,179||112.4|
|Canaan Inc. (CAN)||3.25||557.4||49.3|
|Hut 8 Mining Corp. (HUT)||2.03||353.6||30.7|
- Riot Blockchain Inc.: Riot Blockchain is a bitcoin mining and digital infrastructure company. The company has bitcoin mining operations in Texas and New York. It also has electrical switchgear engineering and fabrication operations in Colorado. In Aug. 2022, the company produced 374 bitcoin, a decrease of about 15% YOY. However, Riot saw a significant reduction in overall power costs for the month through the use of its proprietary power strategy.
- Canaan Inc.: See company description above.
- Hut 8 Mining Corp.: See above for company description.
Crypto Mining Stocks with the Best Performance
These are the crypto mining stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.
|Crypto Mining Stocks with the Best Performance|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|Canaan Inc. (CAN)||3.25||557.4||-62.5|
|Marathon Digital Holdings Inc. (MARA)||12.82||1,498||-64.0|
|HIVE Blockchain Technologies Ltd. (HIVE)||4.55||374.2||-70.3|
|Amplify Transformational Data Sharing ETF (BLOK)||N/A||N/A||-51.5|
- Canaan Inc.: See above for company description.
- Marathon Digital Holdings Inc.: Marathon Digital Holdings is a digital asset technology company engaged in the mining of cryptocurrencies. Its primary focus is on the blockchain ecosystem and generating digital assets. On Aug. 8, Marathon reported Q2 2022 earnings results. It net loss widened considerably YOY as revenue declined by about 15%. Results were impacted by factors including the decline in the price of bitcoin, and maintenance and weather issues.
- HIVE Blockchain Technologies Ltd.: See above for company description.
Analyzing Crypto Stocks
If you are planning to invest in crypto mining stocks and other related companies, it's important to have a sense of the underlying cryptocurrency market. Investing in cryptocurrencies requires an understanding of what data to look for on a technical analysis crypto chart. There are a few basic parameters to consider when assessing the performance of a cryptocurrency.
Price: Checking the price of a cryptocurrency is the first step in checking its performance. Comparing price movements with past days, weeks, months, years, and all times are some of the tools necessary to understand before investing.
Market cap: The market capitalization of a cryptocurrency is calculated by multiplying the price of each token by the number of circulating coins. A comparison can be made with the data over the past few days, weeks, and years.
Trading volume: This refers to the number of times that a coin changes hands during a certain period of time. If it's expanding, that means more and more people are buying the coin.
Hashrate: This is the speed of mining a cryptocurrency. In other words, it measures how many calculations can be completed in a second in units of hash/second. It's a good sign if the hashrate is higher because that means a large number of miners are verifying transactions, and hence the cryptocurrency is more secure.
Circulation supply: In general, circulation supply refers to the number of coins or tokens that are actively traded and used in the market and by people. The price of coins will depreciate if the supply is high and the demand is low.
Risks of Crypto Stocks
Due to high volatility, the cryptocurrency market carries a certain level of risk, and price swings are common. Before you start investing in crypto, you should outline your appetite for risk and implement a solid risk management strategy.
While cryptocurrencies are risky, they also have the potential to offer outsized returns. When Bitcoin began in 2009, the digital currency essentially had very little value. In the years that followed, it jumped to a fraction of a penny and then eventually to tens of thousands of dollars. Gains like these might be among the most significant benefits of investing in cryptocurrency.
In addition, the cryptocurrency market is currently dominated by speculative trading. Studies of blockchain activity show that exchange trades remain the most prevalent use for cryptocurrencies—and account for far more economic activity than ordinary trades and purchases. Cryptocurrency skeptics, including Warren Buffett, Bill Gates, and JPMorgan CEO Jamie Dimon, have all warned of a potential crypto bubble. Cryptocurrencies are not unique in being subject to speculative manias and irrational exuberance, but that's another risk to consider.
As a new technology, some speculative behavior is to be expected, especially as blockchain technology matures. However, new investors should be wary of falling into fraudulent situations or psychological traps such as herd instinct, fear of missing out, or the greater fool fallacy, which can make all the difference between a calculated risk and a foolish one.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
YCharts. “Financial Data.”
Canaan Inc. "Canaan Inc. Reports Unaudited Second Quarter 2022 Financial Results."
Hut 8 Mining Corp. "Hut 8 Reports Operating and Financial Results for Q2 2022."
Riot Blockchain Inc. "Riot Announces August 2022 Production and Operations Updates."
Marathon Digital Holdings Inc. "Marathon Digital Holdings Reports Second Quarter 2022 Results Along with Bitcoin Production and Mining Operation Updates for July 2022."
CoinMarketCap. “Market Capitalization/Market Cap/MCAP.”
CoinMarketCap. “Hash Power / Hash Rate.”
CoinMarketCap. “Circulating Supply."
The Block. "Cryptocurrencies Are Still Mainly Used for Speculation."