To be sure, plenty of bitcoin miners aren’t yet profitable, and this year’s slump by the largest digital currency is weighing on efforts by these companies to shed their money-losing ways. That’s been a drag on exchange traded funds such as the VanEck Digital Assets Mining ETF (DAM), but with some market observers predicting a near-term rally for bitcoin, miners could be ready to follow suit. Additionally, some companies in this space are putting more emphasis on profitability.
“At current prices and Bitcoin network difficulty, only Bitcoin miners with the newest, most efficient rigs and very competitive power rates are able to break even. That is, if they only rely on Bitcoin mining for their revenue. The firms keeping their heads above water have had to find other ways to generate cash with their hardware fleets,” reports Stacy Elliott for Decrypt.
Citing comments made by Applied Blockchain CEO Wes Cummins on that company’s recent earnings conference call, Decrypt highlighted some of the bitcoin miners that have quality traits, relatively speaking. The good news for investors who don’t want to stock pick in this battered group is that DAM is home to some of the best-positioned names to withstand a longer-than-expected crypto winter and exhibit leadership when that scenario ends.
“I think Marathon is one of the best counterparties, if not the best of the publicly traded miners in the industry,” Cummins said on his company’s conference call.
Marathon Digital (NASDAQ: MARA) is the largest of the 25 holdings in DAM at a weight of 8.30%, according to VanEck data. The company strong counterparty positioning could serve to build trust among investors. As it is, the stock is performing less poorly than many rivals in this trying environment.
Another name that could offer upside and contribute to a DAM rebound is Hut 8 Mining Corp . (HUT). That stock accounts for 6.29% of the ETF’s roster.
“But Hut 8’s Bitcoin fervor tapered as CEO Jamie Leverton said the company was growing its HPC business, ‘which includes potentially leveraging our GPU machines to provide AI, machine learning, or VFX rendering services to customers, and mining the next 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 could pay off over the long haul.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.