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2022-08-18

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This Bitcoin Miner Could Thrive If Prices Crash Again

The crypto crisis may have passed, but Bitcoin mining investors would do well to remember its lesson

This Bitcoin Miner Could Thrive If Prices Crash Again

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The big one? When Bitcoin prices crash, costs are king.</p><p>Crypto mining companies have seen their stocks soar in the past month. Even after slumping on Wednesday, shares of Riot Blockchain (ticker: RIOT) are up 34% since July 18. Marathon Digital Holdings (MARA) is up 58%, while Core Scientific (CORZ) is up 71%. That compares to a 11.6% rise for the S&amp;P 500.</p><p>The stocks’ performance is coming mere months after the industry seemed to be facing a crisis. The failure of a major stablecoin and collapse of several crypto lenders caused Bitcoin’s price to crash and the profitability of the miners to similarly crater. The capital markets largely closed off to miners, at least temporarily, and some of the companies—which tend to try to keep the Bitcoin they produce—ended up selling digital assets or equipment to bolster their balance sheets.</p><p>Crypto miners operate massive warehouses of computers and compete against other miners to answer the energy-intensive math problems that power the Bitcoin network. The faster they perform their work, relative to competitors, the more Bitcoin they win.</p><p>That means miners’ long-term value essentially hinges on three factors: Their processing power, their energy costs, and the price of Bitcoin.</p><p>A couple months ago, all of those factors seemed to be working against miners. Some companies, like Marathon Digital, mined fewer Bitcoins than expected because of storms, maintenance issues, and delays in bringing new facilities online.</p><p>Meanwhile, rising energy costs and falling Bitcoin prices conspired to squeeze miners’ margins, bringing overall profitability this summer to its lowest point since the Covid-induced panic in early 2020, according to J.P. Morgan.</p><p>But investors have more to cheer lately.Since sinking below $20,000 in June, Bitcoin prices have rallied to about $24,000. Analysts are almost universally bullish on the sector. Every analyst tracked by FactSet has Buy ratings on Core Scientific and Riot, while Marathon has six Buy ratings and two Holds.</p><p>But with the market working in their favor, at least for now, investors would do well to step back and assess what companies will have the most breathing room should Bitcoin take another step downward.</p><p>To that end, D.A. Davidson analyst Chris Brendler says Riot in particular would be well-positioned to ride out any sort of renewed crypto downturn.</p><p>The company reported a surprise second-quarter loss of 50 cents a share after the close on Monday, compared with the 6-cent-per-share profit that analysts expected, according to FactSet. The loss was driven by a drop in value for recent acquisitions the company had made as well as falling Bitcoin prices, and the company’s stock on Tuesday fell 6%.</p><p>But the near-term pressure obscures Riot’s greatest strength should the so-called crypto winter prolong: its low mining costs.</p><p>Brendler says its mining operations can stay profitable even if Bitcoin prices were to fall by about half from here, and the company has no long-term debt. Of course, such a drop would be painful, but Riot would have an opportunity to pick up market share as other miners, whose costs to mine Bitcoin are higher, potentially shut off their machines.</p><p>Each of the nine analysts tracked by FactSet rate Riot a Buy with a target price of $18.11, about twice where the stock trades now.</p><p>“If you go to $10,000 Bitcoin, the question is who’s going to be able to ride that out?” Brendler says. “If you can, you’re in great shape to print money. If you can’t, you’re not mining. It’s as simple as that.”</p></body></html>","source":"lsy1610680873436","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>This Bitcoin Miner Could Thrive If Prices Crash Again</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThis Bitcoin Miner Could Thrive If Prices Crash Again\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-08-18 20:44 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.marketwatch.com/articles/bitcoin-miner-riot-blockchain-crypto-price-51660692656?mod=mw_latestnews><strong>barron's</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The crypto crisis may have passed, but Bitcoin mining investors would do well to remember its lessons. The big one? When Bitcoin prices crash, costs are king.Crypto mining companies have seen their ...</p>\n\n<a href=\"https://www.marketwatch.com/articles/bitcoin-miner-riot-blockchain-crypto-price-51660692656?mod=mw_latestnews\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RIOT":"Riot Platforms"},"source_url":"https://www.marketwatch.com/articles/bitcoin-miner-riot-blockchain-crypto-price-51660692656?mod=mw_latestnews","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1149908369","content_text":"The crypto crisis may have passed, but Bitcoin mining investors would do well to remember its lessons. The big one? When Bitcoin prices crash, costs are king.Crypto mining companies have seen their stocks soar in the past month. Even after slumping on Wednesday, shares of Riot Blockchain (ticker: RIOT) are up 34% since July 18. Marathon Digital Holdings (MARA) is up 58%, while Core Scientific (CORZ) is up 71%. That compares to a 11.6% rise for the S&P 500.The stocks’ performance is coming mere months after the industry seemed to be facing a crisis. The failure of a major stablecoin and collapse of several crypto lenders caused Bitcoin’s price to crash and the profitability of the miners to similarly crater. The capital markets largely closed off to miners, at least temporarily, and some of the companies—which tend to try to keep the Bitcoin they produce—ended up selling digital assets or equipment to bolster their balance sheets.Crypto miners operate massive warehouses of computers and compete against other miners to answer the energy-intensive math problems that power the Bitcoin network. The faster they perform their work, relative to competitors, the more Bitcoin they win.That means miners’ long-term value essentially hinges on three factors: Their processing power, their energy costs, and the price of Bitcoin.A couple months ago, all of those factors seemed to be working against miners. Some companies, like Marathon Digital, mined fewer Bitcoins than expected because of storms, maintenance issues, and delays in bringing new facilities online.Meanwhile, rising energy costs and falling Bitcoin prices conspired to squeeze miners’ margins, bringing overall profitability this summer to its lowest point since the Covid-induced panic in early 2020, according to J.P. Morgan.But investors have more to cheer lately.Since sinking below $20,000 in June, Bitcoin prices have rallied to about $24,000. Analysts are almost universally bullish on the sector. Every analyst tracked by FactSet has Buy ratings on Core Scientific and Riot, while Marathon has six Buy ratings and two Holds.But with the market working in their favor, at least for now, investors would do well to step back and assess what companies will have the most breathing room should Bitcoin take another step downward.To that end, D.A. Davidson analyst Chris Brendler says Riot in particular would be well-positioned to ride out any sort of renewed crypto downturn.The company reported a surprise second-quarter loss of 50 cents a share after the close on Monday, compared with the 6-cent-per-share profit that analysts expected, according to FactSet. The loss was driven by a drop in value for recent acquisitions the company had made as well as falling Bitcoin prices, and the company’s stock on Tuesday fell 6%.But the near-term pressure obscures Riot’s greatest strength should the so-called crypto winter prolong: its low mining costs.Brendler says its mining operations can stay profitable even if Bitcoin prices were to fall by about half from here, and the company has no long-term debt. Of course, such a drop would be painful, but Riot would have an opportunity to pick up market share as other miners, whose costs to mine Bitcoin are higher, potentially shut off their machines.Each of the nine analysts tracked by FactSet rate Riot a Buy with a target price of $18.11, about twice where the stock trades now.“If you go to $10,000 Bitcoin, the question is who’s going to be able to ride that out?” Brendler says. “If you can, you’re in great shape to print money. If you can’t, you’re not mining. It’s as simple as that.”","news_type":1},"isVote":1,"tweetType":1,"viewCount":208,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"upFlag":false,"length":9,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}