These Bitcoin Mining Shares Are Overvalued Before Halving: Analysts

Bitcoin mining stocks have fallen since the start of the year, and some metrics suggest many are still overvalued, according to industry tracker Power Mining Analysis.

According to the firm's figures, the price-to-book ratio of most publicly traded miners still exceeds 1.0, meaning their market capitalization exceeds their net asset value. Examples include a ratio of 2.51 for Marathon Digital (MARA) and 3.15 for Cipher Mining (CIFR).

CleanSpark ( CLSK ) is up 33% this year, outperforming other miners with the largest price-to-book ratio at 3.59, Power Mining said. Meanwhile, even miners that have fallen significantly this year like IREN (-36%) and RIOT (-47%) have neutral ratios of roughly 1.00 and 1.15, respectively.

A high ratio indicates that the company's stock is unreasonably overheated compared to its fundamental value. This means that market participants are confident in the company's future earnings potential relative to competitors and are pricing accordingly.

It's not the only way to write business value: PowerMining analyzes the “hash rate value” of each miner. This measures how much hashrate the company generates relative to its “enterprise value”—the sum of market capitalization and debt equal to cash and cash equivalents.

As for PowerMining, BitDigital (BTBT) is the clear winner at $27.05 per second in the current Terash (TH/s). But BitDigital is the most undervalued miner when measured against future hash rate predictions, in which case that ratio drops to $12.44.

Meanwhile, CLSK appears to be overvalued again, placing last among the twelve at $150.62 for the current hash rate and third for the future hash rate at $80.02.

“It should be noted that the enterprise value does not take into account additional sources of revenue from other business units such as HPC and Hosting,” Kompas wrote. “It should also be noted that metrics/ratios should never be taken in isolation.”

Meanwhile, financial broker Bernstein believes that Bitcoin miners are currently a clear buy despite the cold measures. Stocks in such firms are dwindling only because of fears that Bitcoin will halve, the company said, adding that they will bounce back after the halving at the end of the week.

“Historically, Bitcoin price breakouts have always occurred in the halving event and sometimes a few months after the decline,” analysts Gautam Chugani and Mahika Sapra wrote in a research note Wednesday.

Bernstein singled out CLSK and RIOT as “outperform” rated stocks, as the market rewards these companies for being leaders in self-generated hash rate.

Edited by Ryan Ozawa.