Gold Miners Outshine Bitcoin Miners To Start 2022. Will It Last?
With a sleepy start to 2022, bitcoin has been outpaced by the classic commodity — but this could change fast.
Since the advent of Bitcoin, physical gold and digital gold have been presented as foils to investors. But perspectives of each asset’s underlying mining industry are too often lacking from the comparison conversations.
In particular, the past 12 months of market activity have highlighted some important idiosyncrasies and similarities between the yellow metal and its blockchain-based counterpart. While bitcoin mining companies significantly outperformed gold miners several months ago, the market trend has shifted to favor gold. But will this dynamic last?
Overviewing some of the latest market data for bitcoin and gold miners is the goal for this article. Along the way, the data will point to important similarities and differences between the two industries showing that, in some ways and despite relentless banter on Twitter, miners of gold and bitcoin have more in common than is typically assumed.
Mining Data Update
All the charts in this section visualize different data sets for the public bitcoin and gold mining industries. The charts may be unnecessary though, given that die-hard gold advocate Peter Schiff has been awfully vocal about his favorite yellow metal recently.
The normalized year-to-date performance of some top gold companies compared to a few top bitcoin mining companies are almost mirror images of each other. The line chart below shows these two groups — gold and bitcoin companies — and their trends in 2022. Gains for public gold mining companies are in the double-digit percentages while price movements for bitcoin miners are roughly the same but in the opposite direction.
Comparing these companies based on how far below their all-time price highs also demonstrates the recent relative strength of physical gold compared to digital gold. The bar chart below shows this data. Readers will notice Barrick Gold is still well below its high set several years ago despite the recent overall strength of the gold market. Bitcoin mining companies, by comparison, are sitting between 60–80% lower than their highs.
All this data tracks closely with the returns for gold and bitcoin themselves, as one would expect.
For Bitcoin, the start to 2022 has not been particularly lively. The leading cryptocurrency has mostly traded in a range between $36,000 and $46,000, occasionally deviating from this area for brief periods. Not surprisingly, this price action has caused bitcoin’s market volatility to steadily decline.
Meanwhile, gold has enjoyed a relatively strong start to the year, steadily trading higher since January.
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