Bitcoin
Why Marathon Digital, CleanSpark and TeraWulf are going to the Moon today
These Bitcoin miners are seeing a big upside today amid strength in Bitcoin price and spot ETF flows.
Cryptocurrency miners are seeing incredible interest in today’s session. Actions of Digital Marathon (MARA 17.98%), CleanSpark (CLSK 7.93%), and TeraWulf (WULFO 10.76%) increased by 19.2%, 10.7%, and 10.4%, respectively, as of 1:15 p.m. ET.
Of course, movements in these main Bitcoin miners have a lot to do with Bitcoin’s price action over the past few days. Since falling below the $57,000 mark earlier this month, Bitcoin has risen above $65,000 at the start of today’s session. At these levels, Bitcoin is about 10% away from its all-time high and appears to be gaining momentum. This is great for Bitcoin miners like Marathon, CleanSpark, and TeraWulf who generate their revenue in Bitcoin, with expenses denominated in dollars.
That said, there are also many company-specific catalysts driving these stocks higher today. Let’s dive into what’s responsible for the big moves we’re seeing in these crypto stocks today.
Crypto miners see big moves ahead of earnings and other key catalysts
Marathon Digital and CleanSpark are expected to release their latest quarterly reports this Thursday, with TeraWulf’s results coming next Monday. So we are less than a week away from seeing how these crypto miners perform in what has been an interesting year for Bitcoin and related stocks. And although the anticipation surrounding the rise in Bitcoin prices tied to the recent halving has died down somewhat, it is clear that recent price dynamics in the Bitcoin world are spurring interest in these stocks in their reports.
One of the main catalysts that appears to be lifting these Bitcoin mining stocks today is the news that capital inflows into Bitcoin exchange-traded funds (ETFs) on Friday totaled $378 million. This increase in capital flow into Bitcoin appears to be at least in part responsible for the token’s impressive movement over the weekend, driving this token’s outsized momentum to the upside.
For Marathon Digital in particular, one of the most closely watched Bitcoin miners of the bunch, there is a number of important news to discuss that appear to be behind this company’s impressive rise. The company today announced its plans to improve its existing long-term incentive program for employees, a move that many hope will generate better retention rates and attract even more talent to the company’s team. And it’s worth noting that despite Bitcoin’s rising price and intriguing HR strategy, the company was recently demoted from the market. S&P 500 and for the S&P SmallCap 600.
For TeraWulf and CleanSpark, some intriguing information investments related to artificial intelligence (AI) in computing capacity appear to be behind the movements of these companies. Bitcoin mining companies have added a huge amount of computing power to their networks for the sole purpose of producing Bitcoin (validating transactions and securing the network). However, any unused capacity could be directed elsewhere, and the pivot that some of these companies are making toward other high-growth areas suggests that investors may be embracing this diversification strategy at this time.
Is this rally sustainable?
Much of today’s rally appears to be a rebound from the move Bitcoin made over the weekend. Bitcoin has already given up about $2,000 at its peak reached last night and early this morning, but is still within $10,000 or so of its all-time high. If Bitcoin continues to rise and interest around crypto miners (as potential AI plays out) increases, it is entirely possible that this space could get a new lease of life.
In general, my opinion is that Bitcoin miners can make sense as short-term trades or as higher beta ways to play a crypto bull market over a specified period of time. But it is also my opinion that, in the very long term, it is likely that further consolidation and fewer players in this sector (due to the exit of unprofitable players) could cause most companies to lose their bets. This is an increasingly competitive space that requires certain Bitcoin miners to rethink their strategies.
Maybe there is an AI angle here after all – that might warrant some deeper analysis on my part. For now, these stocks remain hot and it will be interesting to see how these companies perform following this week’s earnings announcements.
Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin. The motley fool has a disclosure policy.