Comment
Author: Admin | 2025-04-28
The entire Bitcoin mining market–and the wider crypto industry–has experienced significant selloffs over the past few weeks. The liquidation spirals from Terra Luna, Celsius Network, and 3AC rekt many investors. Bitcoin miners are now liquidating coins and machines to free up capital as the bear market claws its path.As the market sells off, investors are concerned about potential credit risks and over extended Bitcoin miner balance sheets. Recently, on Luxor’s Twitter Spaces, I spoke about the risks of collateralization on Bitcoin loans during large Bitcoin price drawdowns. The conversation raised a question: How can investors use active mining fleet values and total debt balance on sheet debt to compare risk?Introducing the Enterprise Value vs. ASIC Value Ratio for Bitcoin Mining StocksEnter the Enterprise Value vs. ASIC Value ratio (EV / ASIC Value ratio), this metric measures the value of a public bitcoin miner’s active rig fleet compared to that company’s enterprise value. The benefit of using a public miner’s enterprise value (instead of just the miner’s marketcap) is that it adjusts cash and total debt from the total market capitalization value of the company. *To understand more about valuations using public miners’ marketcaps and ASIC values, read How to Estimate Public Bitcoin Miner Value using Price to Total ASIC ratio*If a company is less leveraged with debt, the enterprise value will be less than their market capitalization. If the company is highly leveraged, the enterprise value will be higher, as the debt will be larger than the cash on hand. Highly leveraged Bitcoin miners are less desirable as compared to their lower leveraged peers. Mining economics have destabilized and profitability is dropping, so investors should generally favor miners with lower leverage. A low EV-ASIC Value ratio is more desirable than a high ratio.How to Calculate Public Mining Stock Enterprise Value and ASIC Value RatioTo calculate the enterprise value of a public bitcoin mining stock, use the following Enterprise Value Formula:EV = MC + Total Debt − CWhere:MC = Market capitalizationTotal debt = short-term and long-term debtC = Cash and cash equivalents (the liquid assets of a company)If we alter our
Add Comment