Shares of Ebang International Holdings (NASDAQ:EBON) rose sharply on Thursday after the company announced a new product that will allow users to simultaneously mine two popular cryptocurrencies, Litecoin and Dogecoin. At the close, the stock was up almost 14%.
You may be familiar with bitcoin, but it's just one of the thousands of cryptocurrencies. Ebang manufactures hardware mostly used for mining bitcoin, but according to today's announcement out of Hangzhou, China, it has designed a chip that can mine Litecoin and Dogecoin at the same time.
Over the last three months, the price of Litecoin has gone up almost 200%. During that same period, Dogecoin is up a whopping 1,400%. It's quickly becoming a crypto-trader favorite given it's worth just a couple of pennies and traders can therefore buy a lot of tokens.
It's the same reasoning people sometimes use when buying penny stocks. But the point is, these two cryptocurrencies are increasingly popular, aligning Ebang's latest product with that trend. That's why the stock is up today.
Investors should be careful not to overstate the innovation here for Ebang International. Litecoin and Dogecoin are both Scrypt-based cryptocurrencies, which allowed them to merge mining way back in 2014. So it's not like Ebang is enabling something that's never been done before; simultaneous mining of Litecoin and Dogecoin was already a thing.
Rather, this new chip will simply allow Ebang to sell a new line of mining equipment, and one that management says is "superior to other mining machines currently on the market."
Of course, you'd expect management to be proud of its products. But only time will tell if this will translate to meaningful revenue growth in the long run.