Crypto mining refers to the usage of powerful computers to solve complex mathematical problems that result in the creation, or “mining” of cryptocurrencies like Bitcoin (BTC) or Ether (ETH). This involves the validation of transactions made on the decentralized ledger blockchain, where all cryptocurrency transactions are recorded. As a reward for their efforts in authenticating or validating these transactions, miners earn cryptocurrency.
Historically, it has been observed that crypto mining may remain profitable even during “crypto winters,” while they habitually prosper when things are looking up. So, in essence, it may be argued that mining companies have assumed a defensive nature in the world of crypto.
The best crypto miners ensure optimal speed in mining to keep operating temperatures cool, use less energy, and have lower operational costs. Additionally, companies with access to affordable electricity have a distinct advantage.
Geography too, is a major factor behind a successful crypto mining company. First of all, there are countries that monitor the crypto market with a stringent regulatory regime. It is difficult for mining companies to thrive in such an environment. China, for example, has been known to have enacted such regulations, resulting in mass migrations of crypto miners to countries that have more favorable regulatory frameworks. Also, countries like Kuwait, Algeria and Sudan have been hotbeds because of cost efficiencies.
If one were to look ahead, crypto mining stocks appear lucrative and have significant growth potential. The crypto market may not be currently scaling its 2021 highs, but it has long left behind the drastic fall of 2022. As cryptocurrencies gain wider acceptance from traditional trade, as they continue to bridge the gap between independence and regulatory frameworks, the demand for mining operations is projected to rise, potentially leading to a surge in the value of these stocks. It will thus be prudent to keep a watch on three top crypto-mining stocks and their performance this year.
CleanSpark, Inc. CLSK: This cryptocurrency mining company operates advanced microgrids and custom electrical equipment to mine Bitcoin, thus significantly reducing its energy costs and enhancing operational efficiency. CleanSpark’s shares have soared 129.9% year to date (as of Aug 22).
CleanSpark’s expected earnings growth rate for next year is 89.1%. The Zacks Consensus Estimate for its current-year earnings has improved by 5.2% over the past 60 days. The company currently carries a Zacks Rank #2 (Buy).
Stronghold Digital Mining, Inc. SDIG: This is a crypto asset mining company that focuses on mining Bitcoin in the United States. Its shares have climbed 16.1% year to date (as of Aug 22).
Stronghold Digital Mining’s expected earnings growth rate for the current year is 97.7%. The Zacks Consensus Estimate for its current-year earnings has improved by 68.2% over the past 60 days. Stronghold Digital Mining currently carries a Zacks Rank #3 (Hold).
HIVE Digital Technologies Ltd. HIVE: This cryptocurrency mining company operates in Canada, Sweden and Iceland. It engages in the mining and sale of digital currencies. Its shares have surged 141.7% year to date (as of Aug 22).
HIVE’s expected earnings growth rate for the current year is 72.3%. The Zacks Consensus Estimate for its current-year earnings has improved by 39.4% over the past 60 days. HIVE currently carries a Zacks Rank #3.
Bottom Line
Crypto mining companies have been doing well in 2023. Unlike most of the crypto market, mining companies are usually regulated and thus project “stability” to investors, an attribute uncommon to the volatile crypto space. The above-mentioned stocks have been on an upward curve and must be tracked as the crypto market continues to rebound.
HIVE Digital Technologies Ltd. (HIVE): Free Stock Analysis Report
Cleanspark, Inc. (CLSK): Free Stock Analysis Report
Stronghold Digital Mining, Inc. (SDIG): Free Stock Analysis Report
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