Why shares in Riot Blockchain, Silvergate Capital and Hut 8 Mining are rising today

What happened

Shares in several cryptocurrencies jumped today, as the price of the world’s largest cryptocurrency, Bitcoin (BTC 4.84%) rose over the weekend and investors changed the outlook for interest rate hikes.

Shares in the mining company Bitcoin Riot Blockchain (RIOT 21.99%) traded more than 19% higher from 11:50 ET today. Shares in the crypto bank Silvergate capital (SAY 13.01%) traded more than 14% higher, and shares on Cabin 8 Mining (COTTAGE 21.52%) was up over 16%.

So what

Equities and cryptocurrencies have risen in recent days after an unstable last week where new data showed that inflation in June remained warm and investors began to get nervous about how hawkish the Federal Reserve may be with interest rate increases.

Following the new inflation data, some assumed that the Fed could raise its reference rate for night loans, the federal funds, by a full percentage point at the meeting later this month. But then two of the Fed’s more hawkish members said publicly last week that they support a 0.75% rate hike.

More risky assets such as Bitcoin have not fared well in the environment of rising rates, as safer assets begin to yield more and investors demand more from stocks that previously traded at high values. So the announcement from members of the Fed led the market to reconsider its assumptions when it comes to short-term interest rate increases.

Recent Comments on Yahoo! Finance by Gary Gensler, chairman of the Securities and Exchange Commission (SEC), can also drive cryptocurrencies up today. Gensler said Friday that the SEC has the power to exempt some crypto companies from securities-regulating laws to help them comply with current regulations.

“There is a potential way forward,” Gensler said. “I have said to the industry, to the lending platforms, to the trading platforms: ‘Come in, talk to us.’

On Friday, Riot Blockchain CEO Jason Les told Yahoo! Finance that he believes crypto mining companies will continue to “flourish” despite the tough times cryptocurrencies have had in 2022. He said the company “continues to scale our business, continues to scale our power strategy, continues to scale our positive presence”. in the Texas network.

Kryptobanken Silvergate Capital, which has built a real-time payment platform to better facilitate crypto trading between institutional investors and crypto exchanges, is preparing to report earnings for the second quarter of the year tomorrow before the market opens.

As a bank, Silvergate generates net interest income, which is the profit the banks make on loans, securities and cash after financing these assets. Large banks have reported strong growth in net interest income in recent earnings reports, and Silvergate is a major benefit of rising interest rates, so investors can be happy with the income.

What now

With several interest rate hikes still on the way, I can not say with certainty that Bitcoin will not go lower in the short term, but I like the cryptocurrency in the long term.

Bitcoin miners tend to trade very much in line with Bitcoin because it is the asset they extract and hold. But there are other complications that come with the business, including hardware costs, energy costs and demand, and regulation, so I tend to prefer ones like Bitcoin over crypto mining stocks.

Silvergate is one of my favorite cryptocurrencies, and I’m tall. I expect the bank to show strong growth in net interest income tomorrow, but will be curious about how the deposits developed given the intense sales of cryptocurrencies in the quarter.