Bitcoin Miners Thrive As Banking Crisis Unfolds: What’s the Big Deal?

What happened

Today, Bitcoin miners TeraWulf (WULF 21.94%), Riot Platforms (RIOT 9.99%)and Digital Marathon (MARA 15.03%) showing serious price jumps, as Bitcoin’s price surged 8.8% higher in the last 24 hours. TeraWulf’s stock’s intraday movements peaked with a 24.5% gain this morning, while Riot rose a whopping 12.8%, and Marathon Digital had a peak price increase of 18.5%.

The ongoing banking crisis, exemplified by First Republic Bankits precarious situation, has investors seeking alternatives to the traditional financial system. Many are turning to cryptocurrencies like Bitcoin, which is good news for companies that make a living from minting new Bitcoin tokens.

So what

As old school banks continue to stumble in the late stages of this inflationary crisis and the federal rate hikes it inspired, the cryptocurrency market is enjoying a resurgence. These three Bitcoin miners are all directly benefiting from that crypto market trend.

• Ambitious and striving to be the largest Bitcoin miner in North America, Marathon is focused on scaling operations and maintaining a large-scale mining operation. With more than 12,200 Bitcoins on the balance sheet, Marathon is one of the leading cryptocurrency holders among public companies today, behind only Michael Saylors Micro strategy and its 140,000 Bitcoins.
• TeraWulf is the environmentally conscious newcomer on the scene, with a focus on sustainable, environmentally friendly mining. It uses cutting-edge technology and collaborates with some of the biggest names in the industry. It is also the youngest, smallest and least traded company on this list, therefore it is more volatile and sensitive to Bitcoin’s price swings – and even more so when the financial system itself is the main cause of Bitcoin’s price movements. It has mined approximately 1,000 Bitcoins so far, including 233 in March 2023.
• Riot Platforms, a veteran in the space, aims to build a sustainable, scalable Bitcoin mining operation while investing in various blockchain technology companies. You can see it as a middle ground between TeraWulf’s intense environmental focus and Marathon’s larger scale. Riot’s Bitcoin reserves stand at approximately 7,000 coins today.

So, as the banking sector buckles again and crypto investors double down on the digital currency’s ability to continue running with or without the support of dollar-denominated banks, these three crypto miners are poised to outpace Bitcoin’s own price movements. For the record, First Republic shares plunged as much as 41% lower Wednesday as the bank lost more than $100 billion in customer deposits.

What now

Given the current banking crisis and growing interest in cryptocurrencies, these Bitcoin miners are well positioned for potential growth. Today’s price jump makes sense from that point of view.

However, there are significant differences between them. Investors should closely monitor the evolving crypto market as a whole and consider the merits of each Bitcoin mining company.

TeraWulf may be the obvious choice for environmentally conscious investors. Riot Platforms has a versatile growth strategy. Marathon Digital has big ambitions for large-scale mining. So each miner presents a unique value proposition to investors seeking exposure to the increasingly relevant cryptocurrency sector.

At the same time, you have to keep in mind that all these digital mining stocks are inherently more risky than simply owning Bitcoin. They all see long-term value in owning Bitcoin and seek to increase this value by increasing their digital currency holdings over time. That’s the upside.

On the downside, Bitcoin ownership is wrapped in many layers of added risk. Investors could be out of money if their favorite Bitcoin miner runs out of operating cash, or the mining facilities are damaged by a natural disaster, or the management team runs off to Belize with a digital wallet full of embezzled Bitcoin — I mean, most of these extreme risk scenarios will never play out, but you can never be sure.

So tread lightly around these exciting price jumps. Crypto mining stocks are also prone to sudden price drops when Bitcoin has a bad day. This is one of the most volatile sectors on Wall Street these days.