Those miners with larger operations and lower costs are winning favor with investors amid volatile market conditions.
Cryptocurrency-related stocks are posting major gains on Friday as bitcoin (BTC) rallies back over $30,000 and equity markets in general make sizable advances.
CleanSpark (CLSK) and Hut 8 (HUT) are among the larger movers, with each gaining nearly 20%. Shares of miner BitNile (NILE), Marathon Digital (MARA), Bitfarms (BITF) and Riot Blockchain (RIOT) were all up by more than 10% on Friday.
Friday’s rally, however, appears to be little more than a blip on longer-term charts, with most of the mining sector down 50% or more this year, and lower by even greater percentages since the price of bitcoin peaked in Q4 of 2021.
“With the plummeting bitcoin price, the profitability of these companies will continue to be under pressure,” said Jaran Mellerud, an analyst at Arcane Research. However, he added, the larger miners – with lower operating costs than the industry average – should be able to see themselves through the valley of this bear market.
Mellerud further noted that the larger players might take advantage of cheap prices to go on an acquisition hunt of struggling peers.
In fact, Core Scientific’s (CORZ) CEO Mike Levitt this week said his company is already getting calls from other mining outfits potentially interested in selling due to their lack of access to capital markets.
Canaccord analyst Joseph Vafi, meanwhile, put out a bullish note on Hut 8 on Thursday. He noted its relatively long track record (operating since 2018), and $185 million of bitcoin on its balance sheet as bullish factors going forward.
In late-morning action on Friday, bitcoin is up 5% to $30,575, the Nasdaq is up 3.5% and the S&P 500 is up 2.3%.