Please ensure Javascript is enabled for purposes of website accessibility

Why Was Cryptocurrency Stock SOS Limited Crashing on Friday?

By Jon Quast - May 28, 2021 at 3:28PM

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

Bitcoin and Ethereum are down, and China's restrictions on cryptocurrencies create a lot of uncertainty for shareholders of this company.

What happened

Shares of SOS Limited (SOS -4.41%) were crashing on Friday even though there wasn't any news from the company. The company has recently moved to mine cryptocurrencies like Bitcoin (BTC -8.95%) and the tokens native to the Ethereum blockchain, Ether (ETH -9.43%). Both of these digital currencies are down today, which somewhat explains why SOS stock was down 11% during Friday's session. However, it was down more sharply than many other comparable companies.

So what

The stock market opens and closes at specified times, and stock moves are measured between those hours. By contrast, cryptocurrencies can be bought and sold at any time, so we measure their moves over 24-hour periods. As of this writing, Bitcoin is down 8% and Ethereum is down 9%, according to CoinDesk.

A visibly frustrated person sees down stock data on his computers.

Image source: Getty Images.

On May 18, SOS announced that it had received more mining machines for mining both Bitcoin and Ethereum. The computing power a company has is measured with a metric called hash rate. According to the press release from the company, its new mining machines give SOS a Bitcoin mining hash rate of 527 peta-hashes per second (PH/s) and an Ethereum mining hash rate of 1,456 giga-hashes per second (GH/s). 

According to, the total hash rate of the Bitcoin blockchain network is currently over 147,000 PH/s, so SOS' mining operations are still relatively small. However, the hash rate of the Ethereum blockchain network is roughly 600,000 GH/s, according to Etherscan. Therefore, SOS' contribution is proportionally larger.

With both Bitcoin and Ethereum down today, it's not surprising to see SOS stock down. It's just a little surprising to see it down more than its peers. The stock is now down a painful 74% from its 52-week high. However, it's still beating the market averages over the past year.

SOS Chart

SOS data by YCharts

Now what

As a reminder, 98% of SOS' revenue in 2020 came from insurance marketing, not cryptocurrency mining. However, cryptocurrency mining was the company's primary plan for growth going forward.

SOS is based in China, and the government there appears to be upping restrictions on cryptocurrencies, including proposed punishments for mining in China's Inner Mongolia region. To be clear, SOS is headquartered in the Shandong province. However there's a lot of uncertainty for cryptocurrency miners in China right now in general. To summarize, SOS' core business won't be affected by any new government regulations on cryptocurrencies. However, the company's strategy going forward could be in jeopardy. This issue is likely contributing to SOS stock's decline today and will be an issue until there's more clarity out of China.

Jon Quast owns shares of Bitcoin and Ethereum. 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

SOS Limited Stock Quote
SOS Limited
$7.37 (-4.41%) $0.34
Bitcoin Stock Quote
$21,465.94 (-8.95%) $-2,109.60
Ethereum Stock Quote
$1,701.44 (-9.43%) $-177.06

*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 08/19/2022.

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.