Bitcoin Mining Stocks: An Overlooked Investment Opportunity
With all the attention on the possible approval of the first spot Bitcoin (BTC) exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC) and the upcoming halving event, there is one trade that has been flying under the radar – Bitcoin mining stocks.
According to Scott Melker, host of ‘The Wolf of All Streets’ podcast, Bitcoin mining stocks have largely lagged during this bull run. However, it might be time to consider investing in them. Melker discussed this in a recent episode of his show streamed on November 29.
The Impact of Bitcoin Price
In the episode, Melker spoke with investor Mike Alfred about the cryptocurrency and stock market. Both of them made a bullish case for Bitcoin miners, suggesting that investors should consider deploying their capital in this sector to take advantage of what Bitcoin has to offer in the next cycle.
Alfred explained that “Bitcoin mining equity acts as a sort of levered exposure to Bitcoin via the operating leverage from the business itself.” As the price of Bitcoin rises, mining businesses become more profitable, potentially leading to an increase in the value of their stocks.
The Halving and Other Factors
Even if the price of Bitcoin doesn’t experience a significant surge, Alfred argues that some mining companies, like Iris Energy (NASDAQ: IREN), possess versatile and tangible assets such as land, power stations, and infrastructure. These assets can be repurposed for high-performance computing, providing downside protection.
Melker also highlighted that some companies view themselves as data centers, emphasizing their infrastructure’s use beyond Bitcoin mining. Marathon Digital Holdings (NASDAQ: MARA), for example, positions itself for other potential pivots.
Additionally, Alfred noted that the recent trend of mining machines shifting from oversupply to undersupply has resulted in significant machine orders from companies like Marathon, Iris Energy, CleanSpark (NASDAQ: CLSK), and Cipher (NASDAQ: CIFR). These orders aim to upgrade efficiency post-halving and maintain competitiveness.
Bitcoin Price Analysis
Currently, the price of Bitcoin is $37,843, experiencing a slight decrease of 1.09% for the day. However, it has seen a 1.41% increase over the previous week and a 9.63% gain on its monthly chart as of November 30.
Hot Take: Bitcoin Mining Stocks Hold Promise
While Bitcoin mining stocks may have gone unnoticed by many investors, they are positioned to increase in value due to the upcoming halving event and the potential approval of a spot BTC ETF. These assets offer leveraged exposure to Bitcoin and possess versatile assets that can be repurposed for other computing purposes. Additionally, the shift from oversupply to undersupply of mining machines indicates increased demand and potential growth for mining companies. With these factors in mind, it may be worth considering an investment in Bitcoin mining stocks.
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