The pain point of US stock crypto assets, why can't Bitcoin mining stocks always outperform BTC prices at the current stage?

Before the listing of BTC ETF, there were only three types of crypto assets in the US stock market: Coinbase exchange stock $coin, BTC investment company MicroStrategy $mstr, and Bitcoin mining companies represented by $mara, $clsk, and $riot.

At the beginning, $coin was a direct reflection of the prosperity of the coin circle in the US stock market, and most of the time the stock of $coin moved before the BTC price. Later, after the listing of the ETF, the trend of $coin as a leading indicator of the coin circle weakened, because Coinbase is an exchange, its value does not originate from the BTC price, but is more influenced by the risk preference of the entire coin circle, and is also closely related to its revenue situation and market share expectations. Since the ETF was introduced, Bitcoin is Bitcoin, and the coin circle is the coin circle. The price of ETH can better represent the prosperity of the coin circle, so we will find that the trend of $coin is more similar to the price of ETH.

MicroStrategy $mstr is the largest BTC bull in this crypto cycle. It is a highly pure investment company, and its stock price is linked to asset returns. Simply put, fundamentally, $mstr is leveraged BTC. Above the BTC cost line, the net asset return curve of this company is very high, so it far outperforms the BTC price.

Bitcoin mining companies, before the halving of BTC production this year, according to the traditional miner's mindset of mining and selling, they made a profit for every BTC mined, and the income was positive. Investing in mining companies is also based on the expectation that they can produce BTC spot in the future. After the halving, the financial reports of these US mining machine companies all showed losses because they were losing money for every BTC mined, and the more they mined, the more they lost. The losses here should be calculated based on marginal costs. Why is this happening? Miners are different from investment companies like MSTR. The cost of MSTR is mainly interest on loans, while the cost of miners involves factory rent, electricity fees, equipment fees, server costs, personnel wages, and so on. For US domestic Bitcoin miners, these costs are currently very high due to high inflation, and the marginal cost of BTC production is even more than twice that of some Asian countries. If the BTC price is always above the miner's cost line, the longer the time, the lower the value of the stock, even if BTC is trading sideways.

Essentially, the stocks of these mining companies are BTC call options. At the current BTC price, these options are still out of the money. If you hold mining stocks, you are enduring Theta decay every day, which is the reason why mining stocks cannot outperform BTC prices. When will mining stocks see the light of day? Those who often trade options know that when the underlying price slides from out of the money to in the money, the return curve of the option is the steepest. If you are bullish on the BTC price continuing to rise and hold mining stocks, then you should wait for this return rate range, and there will be amazing returns. If you can't wait, then it's another story. Miners may go bankrupt before you. Many people criticize these miners for frequently issuing new shares, which prevents the stock price from rising. Why do they keep issuing new shares? The cash flow is not enough, and these newly issued shares are used to maintain operations, all of which will be factored into the marginal cost of BTC mining.

So compared to these targets, they all have their own risks. Holding $coin is most afraid of the bull market belonging only to BTC and not to the coin circle. Holding $mstr is most afraid of the BTC price falling in the short term, and MicroStrategy may be forced to liquidate to avoid a margin call. Holding mining stocks not only fears a drop in BTC prices, but also fears BTC prices trading sideways.

If you are bullish on the coin circle, the best strategy I can think of is to hold ETF $ibit + $coin + mining stocks, or $mstr $coin + mining stocks. However, regardless of the combination, the proportion of mining stocks should be the smallest. If you go all in on mining stocks, the risk is too high. If you are just a BTC maxi and relatively conservative, then holding $ibit is sufficient. If you want to add leverage, you can hold $mstr in proportion.

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