Just like the price-to-earnings (P/E) ratio commonly used in evaluating public stocks, we have come up with the price-to-hash (P/H) ratio as a unique metric in bitcoin mining that can help investors estimate how much they are paying for each TH/s of realized hashrate.

From an investor’s perspective, this metric can be seen as how much one is paying for a mining company to mine bitcoin on their behalf. Here is the calculation:

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P/H ratio ($/TH/s) = Enterprise Value / Realized Hashrate, where:

Enterprise Value = Market Capitalization + Net Debt (Total Liabilities – Cash – Digital Assets Holdings)

For instance, Marathon’s market capitalization as of July was $2.95 billion and it had a net debt of $251 million as of June 30. Its realized hashrate in July was 15.48 EH/s. Hence its P/H ratio is about $217 per TH/s. From this perspective, buying a share of Mara’s stock would mean paying Marathon $217/TH/s to mine bitcoin. Investors can then evaluate whether this is overpriced or underpriced in comparison to the cost per TH/s they would have to pay to mine bitcoin themselves, taking into consideration of both CapEx and OpEx.

Just like the P/E ratio, a lower P/H ratio means an investor is paying less money for the worth of one TH/s in realized hashrate from a public mining company.