For Bitcoin miners, profitability is a priority
To be sure, many bitcoin miners are not yet profitable, and this year’s decline in the largest digital currency is weighing on the efforts of these companies to throw away their money.
It has been a burden for exchange-traded funds which VanEck Digital Assets Mining ETF (DAM), but with some market observers predicting a short-term rally for bitcoin, miners may be ready to follow suit. In addition, some companies in this area place more emphasis on profitability.
“With current prices and Bitcoin network difficulties, only Bitcoin miners with the latest, most efficient rigs and very competitive power rates are able to break even. That is, if they rely solely on Bitcoin mining for their income .The firms that are keeping their heads above water have had to find other ways to generate cash from their hardware fleets,” reports Stacy Elliott for Decrypt.
Citing comments from Applied Blockchain CEO Wes Cummins on the company’s recent earnings conference call, Decrypt highlighted some of the bitcoin miners that have quality features, relatively speaking. The good news for investors who don’t want to pick stocks in this battered group is that DAM is home to some of the best-positioned names to weather a longer-than-expected crypto winter and show leadership when that scenario ends.
“I think Marathon is one of the best counterparties, if not the best of the listed miners in the industry,” Cummins said on the company’s conference call.
Marathon Digital (NASDAQ: MARA ) is the largest of the 25 holdings in DAM with a weight of 8.30%, according to VanEck data. The company’s strong counterparty positioning can help build confidence among investors. As it is, the stock is performing less badly than many rivals in this trying environment.
Another name that could offer upside and contribute to a DAM rebound is Hut 8 Mining Corp. (COTTAGE). That stock makes up 6.29% of the ETF’s list.
But Hut 8’s Bitcoin glow waned as CEO Jamie Leverton said the company is growing its HPC business, ‘which includes potentially leveraging our GPUs to provide AI, machine learning or VFX rendering services to customers, and mining the second most profitable proof of work digital asset during idle time,” reports Decrypt.
Time will tell, but some of the steps DAM components are taking to survive today may pay off in the long run.
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The opinions and forecasts expressed herein are solely those of Tom Lydon and may not materialize. Information on this website should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.
