Several cryptocurrency mining stocks rose to record highs this week. Data from S&P Global Market Intelligence shows a range from last Friday's closing bell to today's market open Riot pads (riot 6.36%) 23% profit Marathon Digital Holdings (Mara 6.44%) An increase of 28%, and Clean Spark (CLSK 22.76%) It leads the pack with a 56% jump.
They are all specialized in mining Bitcoin Tokens, the price of the largest cryptocurrency increased by 10% during the same period. That's why cryptocurrency mining stocks outperformed actual digital resources this week.
A Week of Wins: Analysis of Coordinated Market Jumps of Cryptocurrency Miners
CleanSpark is a special case this week, as you might have guessed by the huge jump in prices.
First, the company spent $23 million on two mining facilities in Mississippi and a third in Georgia, and promised to boost CleanSpark's total hashrate (a measure of computing power in the cryptocurrency mining industry) by approximately 25% in the first half of this year. . The stock closed up 5% on Tuesday, when these facility purchases were announced.
CleanSpark then reported financial results for the first quarter of fiscal 2024. Revenue increased 166% year-over-year to $73.8 million and adjusted net profit swung from a net loss of $0.46 per share to positive earnings of $0.14 per share. The average analyst would have settled on revenue closer to $70.4 million and a net loss of $0.24 per share. This is a strong quarter by any measure, and CleanSpark stock rose 26% overnight.
Marathon and Riot had less important things to do in terms of publishing. The two companies published January mining results on Monday morning, but their production volumes declined compared to December. Extremely cold weather in Texas and Nebraska has prompted both companies to reduce their energy consumption. Shares of Marathon and Riot fell 9% and 7% that day, respectively.
The two largest bitcoin miners benefited from CleanSpark shares on Friday, posting overnight gains of about 10% as investors saw their smaller rival's stellar results as a bullish barometer for the cryptocurrency mining sector as a whole.
How will the halving affect CleanSpark and friends
Behind these Bitcoin miners' moves is Bitcoin itself, coming back from a pricing squeeze that began with spot-priced exchange-traded funds entering the market last month. Investors are looking forward to further price gains due to the halving of mining rewards in April, which reshapes the economics of cryptocurrency mining on a regular basis and tends to push the digital currency significantly higher over the next 18 months or so.
Declining mining rewards may seem 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 occur every four years.
In fact, CleanSpark CEO Zach Bradford expects the halving to eliminate smaller mining operations with questionable economic models, leaving a larger percentage of global mining volume to the real leaders — including his company, of course.
“This organic growth in market share means we can capture a greater portion of Bitcoin's rewards without additional investments in infrastructure, resulting in enhanced returns to our shareholders,” Bradford said on the earnings call. “Our obsession with preparation and focus on efficiency will continue to drive down our production cost, especially when combined with our best-in-class power rates. Furthermore, this halving is not just a challenge, but a catalyst for positive price movement in Bitcoin.”
This is all good news for Bitcoin miners in general, but it's still not a clear call to double down on these investments. Of these three mining veterans, only CleanSpark shares are trading anywhere near their 52-week highs today, and all three stocks are down 70% or more from their peak prices in the past three years.
I see Bitcoin as a healthy addition to a diversified investment portfolio. Miners can play a supporting role with a smaller, more speculative allocation. This week's price jumps highlighted the long-term potential in this corner of the cryptocurrency market, but also highlighted its inherent volatility. Please be careful dear cryptocurrency investor.
