Marathon Digital, the largest Bitcoin miner in the world based on market capitalization, experienced an 18% increase in its shares after it was confirmed to join the S&P SmallCap 600 index fund. On May 3, the S&P Dow Jones Indices announced that Marathon would replace Aaon, a heating and ventilation manufacturing firm, in the index on May 8. The S&P SmallCap 600 tracks 600 US companies with market capitalization between $1 billion and $6.7 billion, and requires them to have posted profits in both the most recent quarter and the last four quarters.
According to Google Finance, Marathon Digital’s shares rallied by nearly 18% to reach $20.67 on May 6. The stock price has increased by 25.2% since the Bitcoin halving on April 20, which reduced miner block rewards from 6.25 BTC to 3.125 BTC (equivalent to $198,000 at current prices). However, the stock is down 9.86% year-to-date, despite reaching a high of $31.03 on February 28. Given its market capitalization of $5.6 million, Marathon is expected to have a significant weighting in the S&P SmallCap 600 index, which uses a float-adjusted market cap weighting method.
Marathon’s inclusion in the index coincides with the release of its first-quarter earnings on May 9. Investment research firm Zacks predicts a 280% year-on-year (YOY) increase in revenue to $193.9 million and a YOY jump of 166.7% in earnings per share ($0.02). On May 6, shares of Marathon’s rival Bitcoin mining companies also performed well, with CleanSpark and TeraWulf seeing respective increases of nearly 8% and 10.7%.
The rise in Bitcoin mining stocks comes at a time when miner revenue has decreased due to the impact of the halving. Initially, transaction fees were consistently above 3.125 BTC for the first few hundred blocks after the halving, effectively compensating for the reduced block subsidy. However, transaction fees have since declined and are now around 0.2 BTC to 1 BTC at block 842,350, according to data from mempool.space.
In related news, a recent magazine report suggests that 68% of Runes, a type of digital currency, are experiencing losses, raising questions about their viability as an upgrade for Bitcoin.