US-based publicly traded mining company Riot Blockchain has announced that its annual production of bitcoins has more than tripled since 2020.
US-based publicly traded mining company Riot Blockchain has announced that its annual production of bitcoins has more than tripled since 2020. According to a report dated October 6, so far in 2021, Riot has amassed 2,457 BTC (approximately 135 million BTC). Production for September has more than quadrupled each year, with Riot earning 406 bitcoins last year, compared to 91 BTC in September 2020. As of September 30, 2021, Riot had 3,534 bitcoins ($194.4 million). The company says it has mined every bitcoin it owns.
Riot says it now has a deployed fleet of about 25,646 miners, which translates to a total hashrate capacity of 2.6 echashes per second (EH/s). Riot expects to deploy an additional 2,000 Bitmain Antminer S19Js in early November and expects a total hashing performance of 2.8 EH/s once the new units go live. Another 4,000 Antminer S19Js will be shipped from Bitmain's Malaysia factory by the end of October. Despite Riot's strong performance in September, the company did not sell its newly acquired bitcoin. Riot's Build caught the attention of MicroStrategy CEO Michael Sailor, who tweeted: “Publicly traded bitcoin miners don't sell bitcoins, they collect bitcoins. The game has changed. "
Riot also noted that construction of the recently acquired Whinstone facility in Texas is underway "around the clock" with a fourth 100 MW substation due to be installed in December. Looking ahead, Riot expects a hashrate of 7.7 EH/s in the fourth quarter of next year and estimates that more than 81,000 Antminers will be operational by then. Riot is not the only publicly traded mining company to report strong results for September. Rival Marathon Digital Holdings announced on October 4 that they had won 340.6 BTC for the month.
Marathon showed a 91% increase in quarterly production, with the company extracting 1,252.4 bitcoins (nearly $69 million) for the third quarter of 2020. Marathon estimates it commands a fleet of 25,272 miners, which equates to a combined hashrate of 2.7 EH/s. Marathon also secured a $100 million credit with Silvergate Bank on October 1. Marathon shares were up 254% year over year from $11 to around $39, while Riot shares were up 61.5% from $16.48 to $26.61 during the same period. Bitcoin (BTC) may have outperformed traditional financial markets in terms of return on investment, but cryptocurrency still lags behind Bitcoin-related companies.
The price of BTC is up about 290% annually, rising from $10,695 to over $42,000. In comparison, Marathon Digital Holdings (MARA), one of the largest cryptocurrency companies in North America, was up 1641 percent over the same period. More crypto companies outperform BTC spot prices in terms of annual returns. For example, Canada-based Bitfarms (BITF) grew 1736%, while Hut 8 Mining (HUT) and Riot Blockchain (RIOT) grew 1.010% and 913%, respectively, in one year. Nick, founder of Ecoinometrics, a crypto-centric newsletter service, calls mining stocks the “obvious choice”, noting that they allow institutional investors to gain indirect exposure to the Bitcoin market.
“I believe many institutional investors have not immersed themselves in the BTC trading space, largely for compliance reasons,” the analyst said in an article published on Sept. 27, adding: "It's a bit like digging for gold when it's hard to get physical gold back then. So, the game for these guys is probably to stay away from the place but trade stocks." The statement comes after Morgan Stanley announced in its securities documents that it has more than doubled exposure to the Grayscale Bitcoin Trust (GBTC), a traditional investment vehicle for digital asset investors.
More specifically, as of July 31, the Morgan Stanley Europe Opportunity Fund held 58,116 shares in the Grayscale Bitcoin Trust, or GBTC. In July, Cathie Wood's Ark Invest also purchased more than 450,000 shares of GBTC for approximately $1.4 million. In keeping with mining stocks, these investments have demonstrated an increasing institutional appetite for traditional crypto-focused investment products. Nick added that investors will continue to add capital to cryptocurrency stocks until they see viable alternatives, such as exchange-traded funds in the US.
Demand for mining shares is growing as most companies focus on two main perspectives: scale and retention. For example, Marathon said in its unaudited report in August that it had received 21,584 of the highest quality Bitcoin ASIC machines from Bitmain in 2021, adding that it is expected to receive an additional 5,916 currently on its way. As a result, the company expects to launch at least 133,000 bitcoin machines by the middle of next year. Marathon, meanwhile, notes that it now owns 6,695 BTC, including 4,812.66 BTC it bought in January 2021. As a result, the fair market value of Marathon's bitcoins is currently around $333.4 million, giving the company enough capital to increase its production in future. Similarly, Riot Blockchain's August report showed an annual increase in Bitcoin mining capacity of 451%, supported by a fleet of 22,050 miners with a hashrate capacity of 2.2 echashes per second (EH/s). The company mines 441 BTC in August 2021. Riot plans to launch 25,650 Bitmain machines in early September. He is currently building a new mining facility in Texas.
According to analytics provider Glassnode, bitcoin miners collect bitcoins (BTC) as the network hashrate continues to recover. In a Sept. 20 report to the chain, Glassnode said 'miners' BTC balances have increased, with a portfolio of miners holding 14,000 BTC (worth approximately $600 million) in the last six and a half months. The report also notes that the bull market in 2020 and 2021 resulted in miners retaining more of their rewards than in previous market cycles. Miners typically sell BTC to cover their costs, including electricity and hardware bills. The trend of miners continued as the bitcoin network hashrate rebounded in the last quarter. Amid speculation about a Chinese wholesale release, Glasnnode said Bitcoin's hashing power fell 51 percent to at least 90 ecash by the end of June. The network hash strength rebounded 52% from 137 echash on the 7-day moving average. The hash rate recovery indicates that most mining operations have been suspended and are working again. However, Bitcoin's hash rate is currently 34% below the record high of 184 exchanges since May.
Despite growing mining fortunes and a rebound in hashrates, shares of listed mining companies retreated as broader financial markets retreated on concerns that Chinese real estate giant Evergrande may soon be unable to repay its loans. Riot Blockchain, which spent heavily to build a new data center in Texas this year and expand its hashing capacity, has fallen 2.4 percent since it began trading on Monday. Rivals Marathon and Hive Blockchain have fallen a meager 1.5 percent since Monday morning, while Hut 8 shares are down 5.4 percent over the same period - rounding out the performance for each of the "big four" North American mining companies. However, stocks are outperforming bitcoin for the week so far, with BTC plunging more than 10 percent, according to CoinGecko, trading at $42,730 at the time of writing.