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Bitcoin Miners: A Study in Volatility

Many investors hesitate to buy cryptocurrencies directly, because of their unpredictable price swings. But if you think of Bitcoin (CRYPTO: BTC) as a paragon of massive volatility, you haven't seen the charts for bitcoin miners yet. These fickle tickers can make hardened growth stock investors blink and tremble. I can recommend buying and holding crypto-mining stocks only if you don't mind lots and lots of sleepless nights.

Buckle up and I'll show you what I mean.

Let's start with the basics

Here's how five of the biggest names in bitcoin mining stack up in terms of traditional volatility metrics. To give you an idea of each metric's expected readings, I also include values for bitcoin itself, one ultra-stable value stock, and one unpredictable meme stock.


2021 Return

3-Year Return (2019-2021)


Standard Deviation Divided by Average Price






Marathon Digital Holdings (NASDAQ: MARA)





Bit Digital (NASDAQ: BTBT)





CleanSpark (NASDAQ: CLSK)





Stable value: Visa (NYSE: V)





Explosive meme stock: Gamestop (NYSE: GME)





Price data from YCharts and Google Finance. 1-year beta and standard deviation calculations by the author.

The one- and three-year stock returns speak for themselves -- some bitcoin miners are surging while others aren't doing so well. As a point of reference, the S&P 500 (SNPINDEX: ^GSPC) market index rose 27% in 2020 and 90% over the past three full calendar years.

Beta values measure how tightly a security's price moves correlate with a market index, typically the S&P 500. A value of 1.0 shows that the stock tends to move in the same direction and at a similar speed, compared to the chosen index. Our digital asset miners run extremely high scores here, which points to amplified market reactions to whatever is moving the index. Bitcoin, on the other hand, scores a near-perfect zero here. In other words, knowing what the stock market is doing on a day-by-day basis won't help you figure out what's going on with bitcoin prices in the same period -- not in the slightest.

And then there's the standard deviation. This statistical tool is a popular volatility metric that skips the idea of comparing the stock to a market index, and simply calculates how stable or unstable the chart under your microscope is. The basic standard deviation metric generates higher values for high-priced stocks, so I'm dividing the deviation by each security's average price in order to erase that bias. On this basis, all of the miners turn out to be far more volatile than bitcoin.

Big monthly swings

Looking at the same price data from a different angle, you should know that our bitcoin mining stocks tend to make huge moves on a monthly basis.

  • Marathon's stock rose at least 20% (and as much as 99%) in six of the past year's 12 calendar months. It also recorded 20% declines or more in four months.
  • Bit Digital recorded three full-month gains of at least 20%, including a 63% jump in October. The rest of the year showed negative monthly returns with 20% drops or more on four occasions.
  • CleanSpark had just one big win in 2021's monthly calendar, notching an 87% gain in October. Only two months carried a 20% return but the losses in seven 30-day periods fell in the range between 10% and 20%.
  • Let's keep you up to date with the points of comparison, too. Visa's largest one-month gain last year was 11.8% in December. The worst reading came from January's 9.3% drop. That's a model of decorum and tranquility. On the other hand, GameStop's monthly results ranged from a 46.5% plunge in February to a staggering 1,094% gain in January. So yes, there are even crazier charts than the crypto-mining specialists out there.

Why Marathon surges while the other miners plunge

Marathon Digital stands out as a market-beating bitcoin miner. The company's balance sheet looks solid, holding $33 million in cash and $74 million in digital currencies and no long-term debt at the end of the September 2021 quarter. The company has taken on some debt since then, borrowing $650 million in November for the purpose of packing more bitcoin mining machines into its facilities in Montana and North Dakota.

At that moment, CleanSpark had $18 million of cash on hand plus $24 million of digital currency balances. Bit Digital held $26 million of cash and $35 million in digital assets at the same time. This company used to run its operations in Chinese data centers but started shipping its equipment over to unspecified locations in North America when Chinese regulators cracked down on bitcoin mining in September of last year. Neither Bit Digital nor CleanSpark have any long-term debt to speak of in early 2022.

Marathon is the largest bitcoin mining operation on this list, generating 1,098 bitcoins in the fourth calendar quarter of 2021. The solid cash position also inspires investors to trust this company a bit more, since Marathon should be able to pull through temporary cryptocurrency market turndowns by leaning on that beefy cash reserve.

CleanSpark produced approximately 600 bitcoins in the fourth quarter and has a much smaller cash cushion. Bit Digital can look back at 248 freshly minted bitcoins and limited cash reserves. I can't blame investors in these companies for wearing their nerves on their sleeve. The space between successful long-term mining operations and sudden bankruptcy is much smaller in these cases.

Image source: Getty Images.

All of these stocks are risky -- including Marathon

Marathon Digital comes out ahead of the pack in most of my analyses, but I'm not saying that you should load up on that stock right now. The surging stock price also makes that ticker extremely expensive, trading at 32 times trading sales today.

Don't forget that even the cash-rich companies in this category consistently report negative earnings and free cash flows, forcing them to generate enough cash to keep the lights on in other ways. Some of them sell a few of the bitcoins they're generating, undermining the future profitability of their digital assets. All of them also sell more stock as needed, increasing their share counts and diluting the value of each existing share by at least 20% over the last year. That's not a shareholder-friendly way to manage the balance sheet.

And I can't get over the possibility that the Bitcoin foundation eventually listens to critics of its environmental impact and switches to a different transaction settlement technology that doesn't involve mining. Ethereum (CRYPTO: ETH) is rolling out its Ethereum 2.0 upgrade over the next couple of years, doing away with ether mining in the 2022 part of that process, and there's no reason why Bitcoin shouldn't follow suit someday. If and when that happens, bitcoin miners will be stuck with whatever digital assets they have generated plus a large and expensive collection of useless mining hardware.

So Marathon is just about as risky as its smaller rivals. I would rather load up on bitcoin itself than any of these bitcoin mining specialists.

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Anders Bylund owns Bitcoin and Ethereum. The Motley Fool owns and recommends Bitcoin, Ethereum, and Visa. The Motley Fool has a disclosure policy.


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