By the Numbers: The Most Undervalued Bitcoin Mining Stocks
Bitcoin mining stocks really rose to prominence in 2021. Due to the rise in the price of the digital asset, profitability in mining shot up and investors used this as a way to gain exposure to the market. However, as the market has retreated, mining stocks have struggled. However, they continue to operate, and data shows that some of these bitcoin mining stocks remain largely undervalued.
The most undervalued companies
Some bitcoin mining companies have not been in the public eye compared to others. Mainly these have been overshadowed due to the fact that they are not as highly valued as others and their stocks have not performed as well, but this does not mean that these companies are not good in any way.
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An example of a company like this has been Stronghold. The Bitcoin mining company has been operating in the shadows while its valuation remains undervalued. Using the EV/EBITDA value as opposed to the EV/ASIC value, Stronghold shows one of the most promising in terms of undervaluation.
It is important to note that companies that score less than 10 on the EV/EBITDA calculation are considered undervalued, and Stronghold has one of the lowest of all bitcoin mining companies with a score of 2.3. Another is CleanSpark which sits at 2.9, as well as Hut 8 with a score of 2.9. These companies have the lowest valuations even though they hold a lot of promise.
Mining stocks largely undervalued | Source: Arcane Research
Bitfarms is also in the same category with a score of 3.7. These mining companies are a marker for higher returns. However, it should also be noted that these companies also have other burdens, such as debt, which increase their chances of going bankrupt.
Bitcoin miners with higher values
Not all bitcoin miners have been underestimated in these times. Some have achieved high valuations even through the bear market. The largest bitcoin miner by valuation is Marathon Digital which has received a 17.2 EV/EBITDA score. This means that the company operates at a normal valuation and has a greater chance of maintaining a more stable value over time.
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Others have also received a high valuation, but have not passed the 10 mark yet. Core Scientific has received the second highest score after Marathon Digital. The public miner currently has a score of 7.5 on the EV/EBITDA scale, making it slightly undervalued.
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Next is Riot Blockchain, with a score of 6.5, with Argo following close behind with a score of 5.1. However, one thing that separates these two has been the quality of the companies, which makes a bet on such undervalued companies quite beneficial over time.
Featured image from GoBanking Rates, charts from Arcane Research and TradingView.com
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