What happened
Crypto mining is as volatile as it is intriguing, and many investors are seeing this volatility on display today. However, unlike most of this year's price action, today's moves among most major crypto mining companies are directionally positive.
As of 11:30 a.m. ET, most major crypto mining stocks have rocketed higher. Leading the way in terms of gains are Bit Digital (BTBT +5.11%) and Riot Blockchain (RIOT +4.64%), which appreciated 18.4% and 17.4%, respectively. Hut 8 Mining (HUT +0.00%), Bitfarms (BITF +0.00%), and Hive Blockchain (HIVE +4.33%) also saw gains ranging from 10.5% to 13.5% since yesterday's close. And even China-based crypto mining equipment maker Canaan (CAN +4.78%) saw gains of 8.5% this morning.
NASDAQ: BTBT
Key Data Points
NASDAQ: RIOT
Key Data Points
NASDAQ: HUT
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These moves appear to be driven by stabilizing Bitcoin prices. This week, investors have seen a broad recovery in the price of Bitcoin, which now sits right around $21,500 per token. This is a far cry from Bitcoin's high of approximately $69,000 per token last year. However, this level also represents upside of more than 20% from Bitcoin's 52-week low of $17,708, hit this past weekend.
Interestingly, the strong price action Bitcoin has seen via its rally from this weekend's lows in recent days has overshadowed more bearish news for the crypto mining sector. Iran's government has reportedly announced a plan to curtail power to the country's crypto miners in a bid to stabilize the country's power grid.
So what
Bitcoin miners (and mining-related stocks) are heavily affected by the price movements of Bitcoin. In a rising token price environment, miners earn disproportionately higher profits. That's because these companies' revenue flows are almost entirely composed of Bitcoin, with costs fixed in U.S. dollars. Thus, exchange rates matter, and this is clearly the most important exchange rate for most mining-related stocks.
Additionally, cryptocurrency miners have greater incentive to invest in their infrastructure, boosting shares of crypto mining–adjacent stocks such as Canaan. When the tide is rising, it's great for this group. Of course, the price action in the market has been overly bearish of late, leading to massive discounts on these stocks. Thus, some may also suggest that today's rally is tied to a bounce off the bottom. Whether this bounce is sustainable or of the dead-cat variety remains to be seen.
Now what
This impressive move higher in beaten-down crypto mining stocks provides an intriguing storyline for investors watching crypto from the sidelines. Questions about whether capitulation has finally taken hold in cryptoland are now abounding. Indeed, should the market be nearing a bottom, these high-risk, high-upside stocks may start to look attractive.
While the global regulatory environment remains uncertain, it's clear that there are some speculators still out there. Perhaps "buy the dip" isn't dead. At least, not everyone is selling the rip today.
Let's just see if today's move can be carried forward at all.
