What happened

North American crypto-mining stocks were having a good day on Tuesday. Hut 8 Mining (HUT), Marathon Digital Holdings (MARA -0.50%), and TeraWulf (WULF -1.59%) each saw gains between 10% and 11% in earlier trading today. But as of 3 p.m. ET, these gains had dwindled to 1.8%, 2.7% and 5.7%, respectively. 

As is typical with these Bitcoin (BTC 1.12%) miners, the price of the token generally dictates the price for these stocks. With the cryptocurrency initially surging above the psychologically important $20,000 threshold this morning, all seemed cheery in the world of digital currency.

But a late-day collapse in risk assets has led to the world's largest cryptocurrency dipping below $19,000. Thus, this top token has essentially lost all its gains from midday yesterday.

Much of today's late-day decline appears to be tied to bond yields and a stubbornly strong U.S. dollar. This afternoon, the benchmark 10-year U.S. Treasury bond is trading within 4 basis points of the 4% level. Additionally, the U.S. Dollar Index is now above 114 once again, and appears to be looking to test Friday's multidecade high.

So what

For Canada-based crypto mining company Hut 8; U.S.-based miner Marathon Digital; and TeraWulf, which owns and operates Bitcoin mining sites in the U.S., Bitcoin prices matter. That's generally because these companies carry debt denominated in dollars, with revenue coming in (directly or indirectly) via Bitcoin. When the token's price drops, these companies' margins get squeezed, leaving investors to doubt their viability as long-term investments. 

Thus, the declines Bitcoin is seeing of late, at least in reference to the U.S. dollar, are concerning. And with bonds now providing investors with meaningful yields (and a positive real yield -- less inflation -- in some cases), there actually is an alternative right now. Thus, the TINA (There Is No Alternative) trade that buoyed risk assets through the end of last year might be all but over.

For those considering crypto miners as a way to gain leveraged exposure to the price of Bitcoin, this is the kind of price action that bear market bounces tend to provide.

Now what

Bitcoin's struggle to maintain the $20,000 level is notable. Investors looking to gauge which direction the world's largest digital asset will head might look to place a leveraged bet on a particular outcome. While that's not necessarily my cup of tea, I can see why these three mining-related stocks could be appealing to some.

With increased leverage to an already-highly volatile cryptocurrency such as Bitcoin, there comes higher risk. Investors considering any of these crypto miners should only do so within the confines of well-thought-out risk management. Right now, it appears most of the risk-on speculative interest among high-growth assets will remain depressed, at least until a monetary-policy pivot is on the table.