Why Do Most Publicly Listed Mining Companies Continue to Hold BTC?

Source: Blocksbridge Consulting; Compiled by Wuzhu, Golden Finance

A total of 12 publicly traded Bitcoin mining companies reported financial earnings for the first quarter, the last quarter before the halving. In anticipation of a post-halving squeeze on profits, 10 of these companies raised nearly $2 billion through equity financing activities. In contrast, the same group of 10 companies raised a total of $1.25 billion in the fourth quarter.

According to data from TheMinerMag, the three largest publicly traded mining companies by market capitalization—Marathon, CleanSpark, and Riot—accounted for 73% of the funds of all 10 companies. As of March 31, Marathon, CleanSpark, and Riot held a combined $1.33 billion in cash and more than 32,200 bitcoins, valued at more than $2.2 billion.

However, as shown in the above chart, financing activities seem to have cooled since the second quarter. As of Wednesday, less than $500 million was invested in subscribing to major listed mining stocks. That said, this figure is already higher than the third quarter of last year.

While proceeds from equity financing are typically used to fund computing power and infrastructure expansion (as shown in PP&E spending here), ample cash reserves can also explain why most listed mining companies choose to hold their Bitcoin.

Data shows that as of April 30, listed mining companies held a total of more than 48,000 BTC, while Cipher, CleanSpark and Riot sold almost no mined Bitcoin in April to cover operating expenses. Other Bitcoin holders such as Marathon, HIVE and Bit Digital sold 60% to 70% of their April production while accumulating the remaining quantities.

Shareholder dilution, coupled with the Bitcoin halving and the listing of Bitcoin spot ETFs, may have affected mining stocks so far this year. In terms of year-to-date returns, almost all mining stocks have significantly underperformed Bitcoin, according to Tradingview.