Crypto mining stocks plummet as Bitcoin falls from historic highs
- Bitcoin's first big pullback of the year is hurting cryptocurrency miners on Monday.
- Shares of
Riot Blockchainand Marathon Patent Grouphave fallen over 15% on the back of Bitcoin's pullback. Bitcoin miningis now more popular, and more difficult, than ever before according to data from CoinDesk.
Chen said in a statement, "the correction we saw was expected as we believe the BTC price surge recently from under $20,000 to $40,000 in the past four weeks will induce sell pressure," per CNBC.Read more: JPMorgan says stocks are primed for sustained gains in a way they haven't been in years - and identifies 43 names to buy for above-average earnings growth in 2021
However, according to the Bitcoin bulls, there's still room for the cryptocurrency to run."It's probably going to $100,000, then $150,000, then $200,000," Social Capital's Chamath Palihapitiya argued on CNBC's "Halftime Report last Friday. Others, including economist David Rosenberg, argue Bitcoin is nothing more than a "massive bubble" that investors just don't understand.
Bubble or not, Bitcoin miners saw unprecedented gains in recent months.
Shares of Riot Blockchain went from trading at under $10 per share in early December to around $22 per share on Monday. And shares of Marathon Patent Group traded at under $5 per share in early December vs. over $21 per share as of Monday morning.The rapid price appreciation among crypto miners came on the back of mining revenue tripling in recent months.
Unfortunately for public Bitcoin miners, the crypto gold rush also brought new competition to the industry, making mining for bitcoin more difficult, and data from Coindesk shows cryptocurrency mining is more popular and harder than ever before.
This has also put a strain on hardware suppliers in the industry, according to Edward Evenson, business development lead at Braiins, a mining software company."ASIC manufacturers have had to turn away more than half a billion dollars in mining equipment orders in Q4 2020 alone. Hardware supply chains are currently overloaded by immense demand," Evenson said.
Still, if Bitcoin prices don't stabilize, these highly correlated stocks could continue their fall in 2021.
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