There were no cryptocurrency mining outfits listed on the stock market during the 2017 bull run in Bitcoin prices. This time around, the situation is different. In the past month alone, stock prices for bitcoin mining companies Riot Blockchain, Inc. (RIOT) and Marathon Patent Group, Inc. (MARA) have shot up by 145% and 332%, respectively. China-based Canaan Inc. (CAN) has witnessed a 91% appreciation in its price during the same time period.
- Stock prices for Bitcoin mining companies have risen along with the increase in Bitcoin prices.
- The close coupling between Bitcoin price and mining companies cannot mask bad financials and management.
Why Did Prices for Bitcoin Mining Companies Increase?
Since Bitcoin and cryptocurrencies are a new asset class, the valuations for these companies are a function of the assets’ demand in the marketplace rather than their business fundamentals. A higher