Another reason why I believe Bitcoin miners like $RIOT are currently undervalued:
Fees have only made up an average of 1% of the total block income the last two quarters.
When BTC starts moving up only, the average fees paid out per block increases significantly. I could see the fee split going higher than what we've seen in previous cycles due to:
1) lower total block subsidy - fees percentage is defined by fees / (blocksubsidy + fees)
2) increased use of Bitcoin DeFi w/ runes & ordinals, which I expect to pick up again in a risk on environment
Let's just say Fee % for rewards / block returns to the mean level of hype from previous bull markets of around 15%, that's still a significant bump in revenue that's not currently being accounted for in any forecasts.
Another interesting chart comparison to look at:
Top chart is $RIOT price, bottom is the RIOT / BTC ratio.
Last bull market, RIOT initially lagged Bitcoin price action. It wasn't until it broke out of the multi-year downtrend vs. BTC that share price started to go parabolic (box 1 in the picture below).
The last time we saw a breakout of the ratio downtrend was in March of 2023 (box 2). There was a decent squeeze in RIOT share price, but the key difference between 1 & 2 is that in 1 BTC was printing new ATHs... 2, it was just a bounce off the lows of the bear market.
Which leads me to where we are now (box 3). RIOT once again broke out from a HTF downtrend vs. BTC. I think this scenario is much more similar to the 2017 move in that BTC is currently at ATHs and primed to move higher.
With that being said, I think the move we see in RIOT mirrors more closely the one we saw in 2017 than the one we saw in 2023 (e.g. a much more explosive move to the upside).
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