What happened
With the price of the world’s largest cryptocurrency surging over the past week, crypto miners are once again in focus. Today, shares of Riot Platforms (RIOT 4.02%), TeraWulf (WULF 10.76%), and CleanSpark (CLSK 14.58%) are each in focus for investors, posting gains today of 3.9%, 5.9%, and 14.7%, respectively, from yesterday’s close by late afternoon Tuesday.
As Bitcoin (BTC 2.70%) mining-related stocks, these companies each have a vested interest in how the price of the digital currency performs. With the price now above the key $30,000 level, and seeming to be ready to move even higher, these three crypto miners are seeing incredible price appreciation.
So what
Today’s biggest winner, CleanSpark, has also been on a truly incredible ride over the past week. The stock’s five-day move stands at around 58.4%, driven by a key catalyst on April 11. That’s when the company announced a plan to acquire $145 million worth of mining rigs in a bid to double the company’s hash rate (or Bitcoin mining capacity).
The race is on once again to capture market share, as Bitcoin becomes more profitable to mine. The ultimate breakeven for this sector changes constantly, as it’s determined as a function of energy costs (where a miner is based), the hash rate (how much computing power is behind the Bitcoin network at a given time), and the price of the token.
It’s clear that the price of Bitcoin is the most visible determining factor of these stocks’ valuations, and with this token once again on the rise, investors appear keen to get in on the action before this crypto really gets rolling.
Now, the question is which Bitcoin miners will ultimately come out ahead in the race for market share. Other crypto mining stocks, such as Marathon Digital (MARA 2.01%) and Hut 8 Mining (HUT 3.54%), are up today, but not to the same degree as these stocks. Much of that appears to be due to the U.S.-based nature of the three best-performing crypto mining stocks listed in this article today.
Now what
Bitcoin mining stocks tend to provide investors with outsize exposure to overall cryptocurrency price fluctuations. Thus, for those who wish to lower their portfolio’s overall volatility, these stocks might not be the right ones to pick.
That said, in bull markets, these are the kinds of stocks that tend to outperform. In this crypto mini-rally we’ve seen unfold this year (small compared to 2021), this outperformance has been on display. The near-60% move in CleanSpark in the span of a week is a testament to just how violent the moves in these stocks can be.
Now, the question is whether this rally can be sustained. I wouldn’t be surprised to see some profit taking at these levels, considering the magnitude of the appreciation we’ve seen in this sector. That said, crypto is a space driven by momentum, so I’ll be keeping a close eye on how these top miners perform from here.
Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
