What happened
Shares of Greenidge Generation (NASDAQ: GREE) rose on Wednesday, following positive analyst commentary. By the close of trading, the power generation and cryptocurrency mining company's stock price was up 6.8% after rising as much as 36.7% earlier in the day.
So what
B. Riley analyst Lucas Pipes placed a buy rating on Greenidge's shares. He sees the stock soaring to $78 per share, or more than triple its current price.
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Pipes posits that Greenidge will be able to scale its digital asset mining operations with more than 5,300 machines this year and another 18,300 miners in 2022. Notably, he believes the company will be able to fund its expansion with its cash reserves, operating cash flow, and debt financing, thereby avoiding the need to dilute shareholders via stock sales.
Moreover, Pipes highlighted Greenidge's lower cost structure compared to its rivals. The company owns a gas-fired power plant in New York and thus is able to produce its own electricity to fuel its mining operations. "This vertical integration is a competitive advantage and the main driver of its industry-leading cost position," Pipes said.
Now what
Greenidge announced on Sept. 15 that it ordered 10,000 more Bitcoin (BTC +0.82%) miners for its planned facility in Spartanburg, South Carolina. The company expects to receive the machines by the third quarter of next year.
Importantly, Greenidge intends to operate its Bitcoin mining operations in a carbon-neutral manner. Environmental activists have criticized the cryptocurrency mining industry for its enormous energy usage and potential contribution to climate change.
"The addition of 10,000 new miners is an important step in our commitment to expand our fully carbon-neutral capacity," CEO Jeff Kirt said at the time of the announcement. "We expect that these miners will anchor our anticipated facility in Spartanburg, expanding our national footprint by growing our environmentally sustainable mining operations."
