As the anticipation intensifies surrounding the possible approval of the first spot Bitcoin (BTC) exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC) and the approaching halving event, there is one trade that seems to have gone under the radar – Bitcoin mining stocks.
Indeed, as Scott Melker, the host of ‘The Wolf of All Streets’ podcast, pointed out, “Bitcoin mining stocks have largely lagged during this bull run,” but it could be time “to consider an investment” in them, as he explained in the latest episode of his show streamed on November 29.
Bitcoin price effect
As it happens, Melker was discussing the cryptocurrency and stock market with investor Mike Alfred, and they both made a bullish case for Bitcoin miners, arguing that this is where investors “should be deploying your capital if you want to take advantage of all Bitcoin has to offer in the next cycle.”
According to Alfred, “Bitcoin mining equity acts as a sort of levered exposure to Bitcoin via the operating leverage from the business itself,” and as Bitcoin price rises, mining businesses show increased profitability, leading to potential value growth of their stocks.
As a reminder, the prices of multiple Bitcoin mining companies’ stocks soared back in March 2023, recording substantial gains following the surge in Bitcoin price that saw the flagship decentralized finance (DeFi) asset increase its value by 26.20% on its monthly chart, as Finbold reported on March 20.
Halving and other factors
That said, even if the price of Bitcoin does not surge, Alfred argues that some mining companies, like Iris Energy (NASDAQ: IREN), own versatile and tangible assets like land, power stations, and infrastructure, which they can repurpose for high-performance computing, providing downside protection.
Moreover, as Melker pointed out, other companies may view themselves as data centers, emphasizing their infrastructure’s use beyond Bitcoin mining, as is the case with Marathon Digital Holdings (NASDAQ: MARA), which positions itself for other potential pivots.
Furthermore, Alfred highlighted the recent trends of mining machines shifting from oversupply to undersupply as companies like Marathon, Iris, CleanSpark (NASDAQ: CLSK), and Cipher (NASDAQ: CIFR) are making significant machine orders to upgrade efficiency post-halving and maintain competitiveness:
“All of that supply, from my perspective, has literally been soaked up in the last quarter, and so we’ve gone from a fundamental oversupply to an undersupply, and you could see that in these large machine orders. (…) Everybody’s in a rush to upgrade their machine efficiency.”
Bitcoin price analysis
Meanwhile, the maiden crypto asset is currently changing hands at the price of $37,843, down 1.09% on the day but still advancing 1.41% across the previous week and gaining 9.63% on its monthly chart, as per the latest information retrieved on November 30.
All things considered, although Bitcoin mining stocks have gone unnoticed by the majority of investors, these assets indeed are positioned to increase in value in the face of the upcoming halving event, as well as the potential approval of a spot BTC ETF.
Watch the entire video below:
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
