US Bitcoin mining company stocks have seen year-on-year gains far outstripping Bitcoin

Shorting Bitcoin has been a losing battle in recent months, with the No. 1 cryptocurrency by market cap up more than 200% since its March lows. In addition, shares of Bitcoin mining companies traded on the U.S. public markets have significantly outperformed Bitcoin thanks to this rally.

Over the past year, two bitcoin mining companies – Riot Blockchain and Marathon Patent Group – have gained more than 97% and 128%, respectively. Bitcoin is up just 3% since last August.

Both companies slightly underperformed Bitcoin in the first quarter of 2020, but since mid-April, both have taken off.

The relatively small size of blockchain companies is reflected in both companies’ size, with neither company reporting a market capitalization of more than $150 million.

Ryan Watkins, a bitcoin analyst at Messari, said the "premium effect due to renewed interest in cryptocurrencies" is one of the reasons for the recent rise in bitcoin mining company stocks. He said: "It is natural for mining company stocks to follow the growth of the cryptocurrency market."

Comparison of Riot Blockchain and Marathon Patent Group and Bitcoin growth since August 2019

Source: messari

Riot Blockchain and Marathon Patent currently have Bitcoin SHA256 computing power (hash rate) of 357P and 19P respectively.
The strong performance of both companies' stocks came on record trading volumes.
On August 3, Marathon Patent ’s daily trading volume surged to an all-time high of more than $225 million, up from $1.6 million a month earlier. Three days later, the company reached a two-year high of $5.25 per share.
After reporting less than $5 million for much of July, Riot’s daily volume also surged to a record $58 million on August 3, before hitting a yearly high of $4.58.
Watkins added: “It makes sense that bitcoin mining stocks would rise faster than bitcoin as investors often like high premiums during bull markets, which could lead to a surge in trading volumes.”