According to Cointelegraph, Marathon Digital and Riot Platforms are among the most overvalued crypto mining companies relative to their competitors, according to MinerMetrics founder and analyst Jaran Mellerud. The key metric supporting Mellerud's claim is the enterprise value-to-sales ratio, which measures a company's value to its sales revenue. The higher the ratio, the more overvalued a company is. Cipher has the highest EV/S ratio at 7.8, followed by Marathon and Iris Energy each at 5.6, and Riot at 5.5, as per a Nov. 3 report by Mellerud.
Mellerud attributes the high EV/S ratios of these heavyweights to receiving more institutional attention from firms like BlackRock. He expects investors to start allocating to other players in the coming months, which could even out the valuation discrepancies between these stocks. Mellerud suggests there are better-priced opportunities with lower EV/S ratios that could be capitalized on. Riot's high EV-to-Hashrate ratio at 156 is another indicator pointing toward its overvaluation, according to Mellerud.
The Bitcoin mining sector has rebounded strongly in 2023, led by Marathon and Riot, whose share prices have increased 170% and 228% respectively, according to Google Finance. However, not every mining analyst believes Bitcoin mining stocks will continue to rise. Cubic Analytics founder Caleb Franzen noted that Bitcoin already reached its year-to-date peak price, while the top mining stocks are still over 75% off year-to-date price highs. Franzen considered whether Bitcoin mining firms will soon need to become twice as productive in light of the upcoming Bitcoin halving event.
