In my opinion, stocks to watch today are the crypto centric stocks like $Coinbase Global, Inc.(COIN)$
CLSK and MARA are scheduled to post financial results after the bell π closes on Thursday 9/5/2024. This Thursday is crucial because it will be the first time (since the Bitcoin network's fourth halving event last month) that Bitcoin miners publish their performance / profitability figures. How do you think these 2 leading miner stocks will fare? Should you start accumulating these stocks before or after the bell π ?
I have been bullish on MARA and CLSK in the longest time, but when CLSK hit a high of $24.72 and MARA a high of $22.52 on 27 March (few weeks prior to halving), I said that they were overvalued, likely a result of short squeezes and bound to correct. True enough, these stocks started tumbling down shortly after and have been trading sideways ever since. Now that the halving has taken place, miner stocks have seen some correction and that Bitcoin is somewhat stable at a price of USD $56,000 to $64,000, is it a good time to take on some positions? Personally, I'd start evaluating some primary data before taking on some long term positions.
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As reported, the impact of the halving on the mining industry has been small thus far but still noticeable. Here is an excerpt:
πΏπΏBitcoin Miners Still Performing Post-Halving πΏπΏ
CleanSpark (CLSK) β the second-largest Bitcoin miner by market cap at $3.92 billion β mined 721 BTC in April compared to 806 BTC in March, its monthly investor report states. CLSK is currently one of the best-performing Bitcoin mining stocks year to date, surging 60% while other mining stocks suffered amid pre-halving market fears.
Compared to major rivals, CLSK has proven most efficient at mining more BTC with a lower energized hash rate, which reached 17 exahashes per second (EH/s) in April.
By contrast, Marathon Digital (MARA) β the largest Bitcoin miner worth $5.64 billion β mined a comparable 850 BTC last month, even though its energized hash rate is 50% higher at 29.9 EH/s. Marathon Digital's April update said its "average operational hash rate" was just 21.1 EH/s, implying that many of its mining machines were not active while they could be. However, this could be a short run issue and MARA could end up mining a lot more in the long run when all machines are up and running.
Riot Platforms (RIOT) has proven to be even less efficient than MARA and CLSK, mining just 375 BTC on a 12.5 EH/s energized hash rate and an 8.8 EH/s average hash rate. RIOT stock was one of the worst hit between early January and the Bitcoin halving on April 19 and has done little to recover post-halving, trading 30% down year to date.
Several Bitcoin miners saw their BTC revenue drop less than 15% month over month, despite the halving being in effect for roughly one-third of it. Iris Energy (IREN) was able to mine slightly more BTC month over month, thanks to an increase in its operating hash rate over that time. Honestly, I feel that IREN would be a better buy than RIOT even, given its cheaper entry price and fully funded expansion to 20EH/s by end 2024, with an expected improved fleet efficiency to 21.9J/TH.
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These numbers alone post halving looks promising. However it remains to be seen (this Thursday) if profitability of these miner stocks are impacted greatly or not. As such, I'd start taking on some positions in MARA and CLSK, whilst waiting for more credible data this Thursday to take on more positions.
RIOT has been lagging behind it's peers, so it's a stock that I'd stay away from. For those who are cash strapped but want dips in the miner stocks, IREN could be a good entry point. I'd also capitalise on Coinbase's dip (due to SEC's suit / hearing) to load up on more shares for long term hold, given COIN's financial strength and capability in generating consistent and massive profits.
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Comments
Thank you for generously sharing your insights and expertise with me. Your willingness to invest your time means a lot to me, and I truly appreciate it! Just to let you know, I've never traded options before, so I'll need some time to study your notes and wrap my head around it. Thanks again for your guidance! Ive copied them to look at over the weekend π
You'd find that when market price of $20.09 (between the blue bands), this is the price of the option between $1 and $1.10. So you can take the avg to be $1.05. So assuming your buy price is at $20 and you anticipate the market to fall later and tml, you can sell a covered call at $20 to get $1.05 x the number of call options (each option is worth 100 shares, that means 10 options for 1000 shares). So if you sold 10 options at $1.05, you'd get $1050. If MARA falls later and tml, but not so much, at least you have $1050 to pocket.
If you think, nah, I'm a quickie person, not for long term hold. As soon as it rises I want to sell away (esp if you bought the stock on a mon/tues), then you may wanna wait for it to come back up then dispose. If i bought in on a wed/thurs, I tend to sell an immediate covered call for my quickies as 'insurance'. So if market closes above my strike price on Fri, great, it gets called away anyway. And if I decide to change my mind and keep e shares, either I close e call options at a loss or roll it to a wk or wks later.
Then you'd ask. Eh what are the green and yellow bands that I've squared out. Those are for you to see if MARA rises 1 level up to $21, the call options would be worth $1.26-$1.31, cause now it would be 'in the money' and if MARA rises another level up to $21.5, selling the call would be worth $1.56-$1.68.
So, if you think you may fall aslp or be busy when market opens and cannot catch the high, but feel that MARA will rise 1 or 2 levels higher later, I'd preset to sell my option for strike price $20 (assuming my buy price is $20), for a higher price of $$1.56-$1.68 instead of the current market price of $1.00-$1.10 (assuming I feel MARA will run up 2 levels later). Of course, you can sell your option at levels higher than $20 buy price, assuming you want to keep the stock for long term hold and just collecting small 'insurance' money. But if you're a quickie, then calling away at $20 or 1 level higher at $20.5 would be good enough (especially in cloudy situations where you know Bitcoin is unlikely to run up now).