The level of excitement surrounding cryptocurrency has been insane, but this time it’s for real. From the last year, Bitcoin has increased by more than 300%. This rise is very remarkable because it was mainly caused by two significant events namely approval of BTC spot ETFs and halving event on April 19th. Halving event is when mining reward for Bitcoin is cut half thus making it more scarce and valuable. Over the years, this has always triggered a bull run for Bitcoin.
Bitcoin mining companies have attracted my attention due to its sudden increase in price. The process of mining Bitcoin involves solving complex mathematical problems that help to verify transactions on the blockchain network; it involves intense computing power. Brett Knoblauch who is an analyst at Cantor Fitzgerald recently noted that miners are in a great position for growth as they mine coins knowing well that at their current price per bitcoin (BTC) and network hash rate, publicly traded miners will be profitable. Simply put, by investing in bitcoin mining stocks you could take advantage of the fact they produce bitcoins at lower cost than market value which can help cashing out big from the rally in Bitcoin prices.
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Riot Platforms and CleanSpark are two of the most notable among them. Texas-based Riot Platforms operates one of the largest Bitcoin mining farms in North America. Rockdale, which is a huge site with an installed power capacity of 700 megawatts MW, is included in this gigantic setup. In addition to that, they have another one located at Corsicana which is under construction but already has 100 MW on it online and aiming for a total of 1 gigawatt GW. Riot’s self-mining ability was reported to be at approximately 14.7 EH/sec by May and is expected to reach 20.1 EH/s later this year.
First-quarter financial results were recently released by Riot. The company’s revenues amounted to a total of $79.3 million; however, analysts had expected it to be around $95 million thus failing expectations by more than $16 million dollars or so disappointing indeed. They also posted earnings per share (EPS) of 82 cents against Wall Street expectations that ranged from $0.15 up to only -$0.21 after adjusting some unusual items into their numbers, positively increasing overall profitability despite the fact that its mining activities had declined significantly year over year. Specifically, in May, they didn’t sell any Bitcoin yet finished off with 9,084 Bitcoins in their wallets signifying there will always be enough resources if need arises and they would manage power costs effectively.
Knoblauch is of the opinion that Riot is a great investment because of its low cost to mine, growth potential and strong balance sheet. He even goes as far as predicting that the share price could double in a year from now. This optimism is also echoed by other analysts hence giving Riot a unanimous Strong Buy.
On the flip side, CleanSpark proves to be an interesting firm since it combines Bitcoin mining with renewable energy. They have mines in Mississippi, Georgia, and New York that support renewables. Included in the CleanSpark setup are 134,464 mining rigs with 17.97 EH/s hash rate. They are equally efficient at 23.05 J/TH. By end May, they had accumulated 6154 Bitcoins and mined 417 bitcoins in May alone.
Recently, CleanSpark has unveiled plans to acquire two fresh mining sites in Wyoming with a combined output of 4 EH/s. The said figure is for the last quarter, which shows revenue growth of 163% year-on-year up to $111.8 million and indicating that financial condition is good as well.
According to Knoblauch, the best potential for growth lies in CleanSpark due to their efficient mining operations and planned expansions. He predicts that by the end of 2024, CleanSpark will have the highest hash rate and therefore experience significant growth. For this reason, analysts give it another Strong Buy rating accompanied by a chance for higher stock price.