What happened
Shares of the Bitcoin-mining company Riot Platforms (RIOT 10.13%) traded nearly 8.5% lower as of 12:07 p.m. ET today, largely due to a decline in the price of Bitcoin.
So what
One possible reason for the decline in Bitcoin and associated crypto stocks is that Binance, one of the largest crypto exchanges in the world, announced that it was experiencing congestion issues on its network yesterday, which forced the platform to halt Bitcoin withdrawals temporarily.
"Reports of a large bitcoin outflow and withdrawals being paused at a major exchange could be factoring into some of the weakness we're seeing. Ultimately however, there haven't been any major developments as far as price action goes, with bitcoin still very much confined to a multiday bullish consolidation," said LMAX Group Market Strategist Joel Kruger in an interview with CNBC.
Binance would eventually resume withdrawals and tweeted that the exchange had adjusted fees to avoid similar issues in the future. Binance also said the company is working to implement the Bitcoin Lightning Network withdrawals.
Now what
Since the closure of several crypto banks that provided key fiat on- and off-ramp services, I have been wondering how liquidity in the sector might be impacted, but ultimately this doesn't look like anything too serious.
Bitcoin-mining stocks like Riot tend to move in a very correlated fashion with Bitcoin except that they are more volatile. For instance, this year Bitcoin is up 68% and Riot is up 210%. I suspect that Bitcoin-mining stocks will tend to move up and down with the price of Bitcoin, although I personally just prefer to own Bitcoin itself.
