Bitcoin and the Public Markets, 3/28/22: Valuation Focus: We Prefer Spot Bitcoin Over Miners

3 min readApr 1, 2022


This report focuses on the valuation implications of the network Hashrate for the public miners.

By our assessment, a Petahash/s of hashing capacity is projected to mine 1.424BTC in 2022, and 0.808BTC in 2023 (slide 6). From 1/1/2023 through 12/31/2030, our model projects 1PH/s to mine a total of 2.129BTC. 2023 represents ~38% of this 2.129 BTC, in part because of the impact of the 2024 halving. Click here for the full version of this report.

Commodity extracting industries, such as oil & gas and gold miners, trade at an EV / unit of reserve. The EV of Exxon Mobil, for example, is compared to the proven reserves in barrels of oil equivalent, or EV per oz of proven gold reserve in the case of gold miners. The oil group trades at an EV of $25 per BoE, or 23% of the current spot price of oil, while the gold group trades at $737 per oz gold reserves, or 38% of spot. The notion is that as an investor, I can buy 1 oz of gold or invest in the company to own 1 oz of future gold. The reason 1 oz equivalent of the company is cheaper than spot is because there are operating costs and future capital expenditures required to extract that gold.

We view an investment in a Bitcoin miner similarly: an investment in the miner gives us a proportional share of future bitcoin mined, with the need to account for future operating expenses to run the miners as well as “sustaining capex”, the capex needed to support and upgrade the existing Hashrate. Thus, the price an investor should be willing to pay to own 1 Bitcoin “in the ether” by proxy through stock ownership should be less than the spot price of Bitcoin by the opex and capex required to mine it, with an additional time value component as well. For every Bitcoin that a miner will mine over the years, the valuation should be a modest fraction of the current spot price of BTC.

While Oil and Gold trade at at EV / Unit Reserve of 23 & 38% of Spot, BTC miners trade at a weighted 96% of spot.

The public miners are expected to mine 85,327 BTC in 2022, by our model, including YTD mined BTC. At the current spot rate of $47,700 per BTC, this would imply $4.07B in revenue. Bloomberg consensus revenue of $5.2B (for 15 of 18 stocks) (slide 17) thus implies that either analyst consensus expects less Hashrate growth or a higher average price vs spot. If Hashrate and thus mined BTC align with our model, BTC price would need to average $61k or more for the year to achieve this revenue.

This is rich for our taste, because the EV to BTC reserve valuation at 96% of spot leaves no margin for error — or even for opex / capex). We would rather hold spot BTC and selectively consider individual miners trading at a lower EV / BTC Reserve (see right) or with diversified revenue streams such as hosting.

Key Takeaways

Bitcoin miners trade at an adjusted EV per BTC in reserve of $47,872 vs a $ 47,700 spot price

We assess that consensus estimates assume some combination of a $61k average Bitcoin price and/or significantly lower Hashrate than our model

Given the rich value for miners vs their Bitcoin Reserve, layering on price appreciation or Hashrate downside is aggressive, in our assessment

We would rather own spot Bitcoin than Bitcoin miners as a group, and selectively see opportunity in lower valued stocks and / or diversified stocks




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