Crypto mining is as volatile as it is intriguing, and many investors are seeing this volatility on display today. However, unlike most price movements this year, today’s movements among most major crypto mining companies are directionally positive.
As of 11:30 a.m. ET, most major crypto-mining stocks soared. Leading the way in terms of gains are Digital bit (BTBT 11.97%) and Riot Blockchain (RIOT 13.23%)which appreciated by 18.4% and 17.4% respectively. Hut 8 Mining (HUT 7.49%), Bit Farms (BITF 7.52%)and Hive Blockchain (HIVE 7.54%) also recorded gains ranging from 10.5% to 13.5% since yesterday’s close. And even a China-based crypto-mining equipment manufacturer Canaan (BOX 3.44%) posted gains of 8.5% this morning.
These movements seem to be motivated by the stabilization Bitcoin prices. This week, investors have seen a broad rally in the price of Bitcoin, which is now hovering around $21,500 per token. This is a far cry from Bitcoin’s peak of around $69,000 per token last year. However, this level also represents a rise of more than 20% from Bitcoin’s 52-week low of $17,708 hit last weekend.
Interestingly, the strong price action that Bitcoin has seen via its rally from this weekend’s lows in recent days has overshadowed more bearish news for the crypto mining sector. The Iranian government has reportedly announced a plan to cut power to the country’s crypto miners in a bid to stabilize the country’s power grid.
Bitcoin miners (and mining-related stocks) are heavily affected by Bitcoin price movements. In an environment of rising token prices, miners make disproportionately higher profits. Indeed, the revenue streams of these companies are almost entirely comprised of Bitcoin, with costs set in US dollars. So, exchange rates are important, and this is clearly the most important exchange rate for most mining-related stocks.
Additionally, there is more incentive for cryptocurrency miners to invest in their infrastructure, increasing the shares of stocks adjacent to cryptocurrency mining such as Canaan. When the tide comes in, it’s great for this band. Of course, price action in the market has been excessively bearish lately, leading to massive discounts on these stocks. So, some may also suggest that today’s rally is tied to a rebound from the bottom. Whether this rebound is sustainable or a dead cat remains to be seen.
This impressive upward move in battered crypto mining stocks offers an intriguing story for investors looking at crypto from the sidelines. Questions about whether surrender has finally taken hold in cryptoland now abound. Indeed, if the market is approaching a bottom, these high-risk, high-upside stocks might start to look attractive.
Although the global regulatory environment remains uncertain, it is clear that there are still speculators. Maybe “buying the dip” isn’t dead. At least not everyone is selling the tear today.
Let’s just see if today’s decision can be postponed.