Please ensure Javascript is enabled for purposes of website accessibility

Why Bit Digital Stock Was Bouncing Back Today

By Jon Quast - Updated May 20, 2021 at 11:42AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The price of Bitcoin has started to recover, which is good news for this miner.

What happened

Shares of Bit Digital (BTBT -6.57%), a company in China that mines popular cryptocurrency Bitcoin (BTC -1.35%), were bouncing back today following months of steady declines. As of 10:30 a.m. EDT on Thursday, the stock was up 9%. And it's likely because the price of Bitcoin isn't crashing today, like it was yesterday.

So what

Bitcoin took a big step back yesterday after the People's Bank of China reportedly told its citizens that cryptocurrencies can't be used as a form of payment. For perspective, Bitcoin was almost at $65,000 just last month. Yesterday, following the news from China, it briefly dipped below $35,000 -- nearly halved in a very short amount of time. Companies like Bit Digital have been slumping as a result.

Stacks of physical, golden coins display the symbol for Bitcoin.

Image source: Getty Images.

However, Bitcoin has recovered from yesterday's lows and currently has a price around $42,000. That's helping some cryptocurrency stocks like Bit Digital recover today.

Now what

There's a real-world cost to mining cryptocurrencies. In 2020, Bit Digital mined 1,510 Bitcoin tokens, according to filings with the Securities and Exchange Commission. But that Bitcoin didn't come free. It cost $14.1 million to mine it, implying a break-even price of $9,340 for the year. 

For the first quarter of 2021, Bit Digital was able to increase the amount of Bitcoin it mined, raising it to 1,013 for the quarter. However, its costs also went up because it's running more equipment now. Its cost of revenue was almost $12.5 million, implying a break-even price of around $12,300 per Bitcoin.

Therefore, Bit Digital still has plenty of breathing room to be profitable on a gross-profit basis at the current price of Bitcoin. However, with costs going up to increase its mining power, the company would certainly benefit from a continued recovery in the cryptocurrency market.

Jon Quast owns shares of Bitcoin. The Motley Fool owns shares of and recommends Bitcoin. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bit Digital, Inc. Stock Quote
Bit Digital, Inc.
$1.83 (-6.57%) $0.13
Bitcoin Stock Quote
$23,914.41 (-1.35%) $-327.45

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.