Bitcoin (BTC) might have outperformed traditional financial markets regarding investment returns, just the cryptocurrency yet fell behind Bitcoin-related companies.

The price of BTC climbed by about 290% twelvemonth-over-year in which it surged from $10,695 to a picayune over $42,000. In comparison, shares of Marathon Digital Holdings (MARA), one of the largest Northward American crypto mining companies, rose by 1,641% in the aforementioned period.

MARA stock weekly price chart. Source: TradingView.com

Institutions-led pump

More crypto mining firms outran spot BTC prices in terms of YoY returns. For instance, Canada-based Bitfarms (BITF) surged 1,736%, while Hut 8 Mining (HUT) and Riot Blockchain (RIOT) rallied by 1,010% and 913% in a year.

The performance of spot Bitcoin versus crypto-focused stocks in a year. Source: Ecoinometrics

Nick, the founder of Ecoinometrics, a crypto-focused newsletter service, called mining stocks an "obvious pick," noting that they gave institutional investors indirect exposure to Bitcoin markets.

"I bet a lot of institutional investors oasis't still dipped their toes in trading spot BTC, mostly for compliance reasons," the analyst explained in an article published Sept. 27, adding:

"It is a fleck like the gold miners when dorsum in the days it was complicated to get your easily on concrete gold. And then the play for these guys has probably been, stay away from spot but trade the stocks."

The statements surfaced every bit Morgan Stanley reported in its securities filings that it had more than doubled its exposure in Grayscale Bitcoin Trust (GBTC), a traditional investment vehicle for digital nugget investors.

In particular, the Morgan Stanley Europe Opportunity Fund owned 58,116 shares of the Grayscale Bitcoin Trust, or GBTC, as of July 31.

In July, Cathie Wood'due south Ark Invest also purchased more 450,000 GBTC shares worth about $ane.4 one thousand thousand. In line with mining stock performances, these investments showed an increase in the institutional appetite for crypto-focused nonetheless traditional investment products.

Nick added that investors would keep adding their capital into crypto mining stocks as long as they don't run into a feasible alternative, such as an substitution-traded fund in the United States.

Scaling and hodling

The demand for mining stocks increases every bit the bulk of firms focuses on ii important prospects: scaling and property.

For instance, Marathon reported in its non-audited August written report that it had received 21,584 superlative-tier Bitcoin mining ASIC machines from Bitmain in 2022, calculation that information technology is due to get another 5,916 that are currently in transit. As a result, the visitor expects to run at least 133,000 Bitcoin mining machines by the middle of adjacent yr.

Meanwhile, Marathon noted that it now holds half dozen,695 BTC, including the four,812.66 BTC information technology purchased in January 2022. As a issue, the fair market place value of Marathon's current bitcoin holdings is now around $333.4 one thousand thousand, giving the firm adequate capital to scale up its productions in the future.

Similarly, Riot Blockchain's August study showed a 451% increase in its Bitcoin mining capacity on a year-over-year basis, helped by its fleet of 22,050 miners, with a hash charge per unit chapters of 2.2 exahash per 2nd (EH/s). The firm mined 441 BTC in Aug 2022.

Related: Miners have accumulated $600M worth of Bitcoin since Feb

Riot noted that it plans to have 25,650 Bitmain machines in functioning by early September. It is currently building a new mining facility in Texas.

The views and opinions expressed here are solely those of the author and practise not necessarily reverberate the views of Cointelegraph.com. Every investment and trading move involves risk, yous should acquit your ain research when making a decision.