Why did mining stocks surge recently? Is MARA about to take off?
$CleanSpark(CLSK.US) $Mara(MARA.US)
In the last 5 trading days, Bitcoin mining stocks have undoubtedly become the brightest stars in the U.S. stock market again. The Bitcoin mining index WGMI rose more than 30% in 5 trading days, with the leader CLSK soaring over 50%. During the same period, the U.S. stock market did not rise, and Bitcoin only increased by 10%. The trigger for this recent surge is undoubtedly the halving event. I believe there are two reasons why the halving led to such a significant rise:
Bad news digested, short covering. The impact of Bitcoin halving on miners' revenue is obvious—income is halved. Therefore, during this year's Bitcoin rally, mining stocks not only failed to rise but even fell, with prices generally halved or even dropping more than 60%. This has already fully, if not excessively, reflected the negative impact of the halving.
Post-halving surge in transaction fees. Miners' income comes not only from mining but also from transaction fees. Since transaction fees are usually stable at low levels, the market did not fully price this in. However, after this halving, due to factors like Runes, transaction fees surged significantly, boosting miners' income expectations. We can see that in July and December last year, miners significantly outperformed Bitcoin itself, corresponding to two periods of surging transaction fees. This time, the peak transaction fees far exceeded last year's levels, providing a clear boost to miners' stock prices.
Amid the overall surge in miners, the persistently weak MARA finally broke its slump yesterday, leading the rally among all mining stocks. My main holdings are CLSK and MARA, and MARA's recent weakness has been frustrating. Is MARA about to rebound and reclaim its throne as the leader of miners? It's still hard to say. MARA's strengths are undeniable—as the industry leader, it holds a large amount of Bitcoin, has new machines, high hash power, and an experienced management team, which has kept it at the top for years. However, this year, MARA has faced various operational issues, leading to unstable efficiency, with hash rates significantly lower than the peak in December last year. There has been no sign of a complete resolution for four months. Yesterday's rally was mainly due to a sudden efficiency spike, with MARA mining 9 blocks in a single day, compared to an average of 3 blocks per day in previous days. Today, it has already mined 5 blocks. If MARA can stabilize its efficiency, even if not as high as CLSK, its larger hash power would still give it a production advantage. If MARA can maintain efficiency at 85%, assuming Bitcoin's peak price this cycle is $120,000, MARA's fair stock price should be above $60.
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