Today has been a very good day for Bitcoin (CCC:BTC-USD) mining stocks. Marathon Digital (NASDAQ:MARA), Riot Blockchain (NASDAQ:RIOT), Hut 8 (NASDAQ:HUT) and Bit Digital (NASDAQ:BTBT) are each up more than 10%.
Of course, the rising price of Bitcoin, up 10% at the time of writing, has something to do with this. As Bitcoin miners who finance their businesses in dollars and receive their revenue in the form of Bitcoin, a BTC price is extremely important. As Bitcoin prices rise, the margins of these companies take off, mainly due to the nature of their high fixed expenditures.
Of course, now that BTC is headed in the right direction, many investors are paying attention to Bitcoin mining stocks. Why? Miners have a high correlation to the price of the coin itself. Accordingly, these stocks are often viewed as higher-volatility bets on the directional move of Bitcoin.
Certainly, the macroeconomic environment is looking much more bullish for cryptocurrencies today. However, there’s another factor impacting these stocks right now. Let’s dive into what investors are watching with these top crypto mining stocks.
Bitcoin Mining Stocks Surge on Higher Production Numbers
Like other commodities miners, one of the only levers Bitcoin miners can pull is production. In the case of Marathon Digital specifically, today’s reported production numbers have blown investors away.
Marathon reported January Bitcoin production growth of 816% on a year-over-year basis. That’s right — this company just produced 8 times as much BTC as the same time last year. Given the direction Bitcoin prices are moving today, investors may look at Marathon’s balance sheet with a sense of greed.
Marathon’s overall production in January has brought this company’s total Bitcoin holdings to nearly 8,600 coins. At a price of more than $40,000 per coin, that’s worth more than $300 million. Combined with cash and cash equivalents, Marathon’s balance sheet now holds nearly $520 million in liquidity.
For a company that’s worth $2.4 billion, that’s an impressive capital buffer. This balance sheet strength should, at least over the near term, calm investor concerns about Bitcoin price fluctuations. However, if we are entering into another crypto bull run, this is a stock that could see its valuation take off, particularly given the production growth we’ve seen of late.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.