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Several crypto mining stocks have soared this week. It is measured by the time between last Friday’s closing bell and today’s market open, according to data from S&P Global Market Intelligence. riot platform (riot 11.42%) 23% increase; Marathon Digital Holdings (Mara 9.83%) 28% increase; clean spark (CLSK 33.86%) He leads the pack with a jump of 56%.
They all specialize in mining Bitcoin The price of the token, and the largest cryptocurrency, rose 10% in the same period. Here’s why crypto mining stocks outperformed physical digital resources this week.
A Week of Victory: Analyzing the Adjusted Market Jump of Cryptocurrency Miners
This week’s CleanSpark is a special case, as you might guess from the huge jump in price.
First, the company invested $23 million in two mining facilities in Mississippi and a third in Georgia, increasing CleanSpark’s total hash rate (a measure of computing power in the crypto mining industry) to approximately We promised to improve it by 25%. . Shares closed 5% higher on Tuesday when these equipment purchases were announced.
CleanSpark then reported its first quarter fiscal 2024 financial results. Revenues increased 166% year-over-year to $73.8 million, and the adjusted bottom line went from a net loss of $0.46 per share to a profit of $0.14 per share. The average analyst expects revenue of nearly $70.4 million and a net loss of $0.24 per share. This was an explosive quarter by any measure, with CleanSpark stock up 26% overnight.
There were less newsworthy events happening during the marathon and the riots. Both companies announced mining results for January on Monday morning, but production was down from December. The extreme cold in Texas and Nebraska has caused both companies to reduce their electricity consumption. On this day, Marathon stock and Riot stock fell 9% and 7%, respectively.
Two of the biggest bitcoin miners rode the tailwinds of CleanSpark on Friday, posting gains of around 10% overnight as investors viewed the impressive performance of their smaller rivals as a bullish barometer for the crypto mining sector as a whole. was recorded.
How half-life impacts CleanSpark and its friends
Behind the scenes from Bitcoin miners, Bitcoin itself is recovering from price pressure that began with the entry of spot-priced exchange-traded funds into the market last month. Investors are hoping for further price increases from April’s halving of mining rewards, which regularly reshuffles the economics behind crypto mining, leading to dramatic declines in digital currencies over the next 18 months or so. It is on the rise.
Declining mining rewards may sound like a challenge for Marathon, Riot, and CleanSpark, but they wouldn’t be in this business if they didn’t expect this completely predictable cycle to arrive every four years. There probably wasn’t.
Indeed, CleanSpark CEO Zach Bradford says the halving will wipe out small-scale mining operations with questionable economic models and move a greater proportion of the world’s mining output to become true leaders. (including, of course, his own company).
“This organic growth in market share means we can capture the majority of Bitcoin’s rewards without additional infrastructure investment, leading to improved returns for our shareholders,” Bradford said on the earnings call. . “Our focus on preparedness and efficiency allows us to continue to drive down our production costs, especially when combined with best-in-class electricity rates.Furthermore, this halving is not just a challenge; “Bitcoin becomes a catalyst for price action.” ”
While this is all good news for Bitcoin miners in general, it is still not an explicit request to double down on these investments. Of the three mining veterans, only CleanSpark’s stock is currently trading near its 52-week high, and all three are down more than 70% from their peak prices over the past three years.
I consider Bitcoin to be a healthy addition to a diversified investment portfolio. Its miners can play a supporting role with smaller, more speculative allocations. This week’s price surge highlighted the long-term potential in this corner of the crypto market, but also highlighted its inherent volatility. Dear crypto investors, please be careful.
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