What happened
Shares of several Bitcoin-mining companies rose this week, despite the price of Bitcoin falling, which isn't always such a common occurrence. Shares of CleanSpark (CLSK +1.90%) traded roughly 22% higher for the week as of noon Thursday, according to data from S&P Global Market Intelligence. Meanwhile, shares of Riot Platforms traded roughly 14% higher, and shares of BIT Mining Limited were up more than 15%.
So what
Bitcoin miners and the price of Bitcoin tend to move in the same direction because Bitcoin is the asset that a lot of these companies mine and hold, although the mining companies tend to be more volatile.
Image source: Getty Images.
Bitcoin had actually been in the green this week until this morning when ADP reported that U.S. private sector payrolls surged by close to 500,000 in the month of June, way ahead of estimates and showing that the economy remained hot last month.
Data like this supports more rate hikes from the Federal Reserve. The news comes less than a day after minutes from the Fed's June meeting showed that some members of the Fed wanted to raise interest rates at its June meeting instead of leaving them unchanged.
The minutes also showed that another rate hike is very much on the table for the Fed's July meeting. Bitcoin and other crypto stocks have not fared well in the face of rising interest rates, and most of the crypto rally this year was based on the belief that the Fed's rate-hiking campaign was almost over.
In more company-specific news, CleanSpark earlier this week said it mined 491 Bitcoin tokens in June and sold 413 of those to help fund its operations and growth. During the quarter ending June 30, CleanSpark mined a total of 1,624 Bitcoin, which is up 170% from the sequential quarter. CleanSpark's CEO Zach Bradford said in a statement:
We made substantial progress growing our bitcoin holdings this quarter, while continuing to advance our growth plans. This was a quarter of execution for us, as we expect the Washington expansion to go live later this week. We also anticipate that our recently announced acquisition, two facilities located in Dalton, Georgia, will be fully operational this month.
NASDAQ: CLSK
Key Data Points
In other industry news, the alternative asset management firm Valkyrie became the latest fund to file for a spot Bitcoin exchange-traded fund -- news to which cryptocurrencies and crypto stocks have responded very favorably.
Now what
As I've talked about in the past, I do like Bitcoin and think it is here to stay. I also think it's worth having some exposure to it in your portfolio, given that it has proven it can perform well in some difficult and unusual market environments.
While the crypto miners tend to do well when Bitcoin does, they have already been on a great run this year, and I think it's becoming more and more likely that the Fed may continue to raise interest rates this year.
A drop in cryptocurrencies will likely lead to a more pronounced drop in the miners, which is one reason I prefer to own Bitcoin over these companies.
