Go West! The Great Crypto Mining Migration (ISWH, HVBTF, MSTR, RIOT)

Recall that, in May, according to CNBC, Beijing called for measures to stamp out bitcoin mining amid concerns over its environmental impact. By a week ago, we were already seeing major Chinese crypto miners fleeing China for other regions, including North America.

One should contrast this shift in China with how crypto – and particularly Bitcoin – is evolving as a regulatory concept the US. The US Securities and Exchange Commission (SEC) chairman, Gary Gensler, announced last month that the Commission will come up with a regulatory framework on crypto next year. We would assume this is meant to be a comprehensive step.

The language suggests BTC, and crypto in general, has made enough of an inroad into US life that it will find some sort of regulatory home in the US. This is also supported by the epochal tide pushing the US and China toward opposite sides on just about every issue.

This signaling from the SEC provides for major investments to start now, beginning, most likely, with the relocation of major miners from the East to the West, with major implications for investors in the space.

With that in mind, investors might want to have an eye on stocks involved in mining or hosting in crypto, including Coinbase Global Inc (NASDAQ:COIN), Riot Blockchain Inc (NASDAQ:RIOT), ISW Holdings (OTCMKTS:ISWH), Marathon Patent Group Inc (NASDAQ:MARA), HIVE Blockchain Technologies Ltd (OTCMKTS:HVBTF), MicroStrategy Incorporated (NASDAQ:MSTR), Canaan Inc – ADR (NASDAQ:CAN), and Paypal Holdings Inc (NASDAQ:PYPL).

We take a look at a few of the more interesting names with recent catalysts below.

 

ISW Holdings (OTCMKTS:ISWH) and Bit5ive partnered through a JV structure about a year ago to design and assemble a new POD5 concept mining solution – a fully self-contained high-PUE mining solution designed for installation and plug-and-play mining capability.

Each pod is powered by 280 mining rigs and is capable of driving roughly $2.9 million in annualized revenues (at current cryptocurrency price levels). ISW Holdings continues to build out its own mining capacity, with plans to bring multiple additional pods online this year.

ISW Holdings (OTCMKTS:ISWH) also just put out huge news about a new agreement giving the company control of a property in Georgia that is tailored to crypto mining and comes with full access to and control over as much as 100 MW of power, which could drive a gross mining capacity exceeding $100 million in annual revenue run rate.

According to its release, the Company is now in the first phase of its expansion into hosting mining operations. The necessary engineering and design involved in installation is already underway. This first phase consists of over 20 MW of power to be deployed among 20 separate New Generation 1-MW POD5 units. The Company believes this entire first tranche of power will be deployed to active mining operations by the end of this year. The expected gross revenue run rate attached to this initial phase – deployment of the first tranche of 20 MW of power – is currently estimated at more than $10 million per year.

“This agreement puts us in position to scale up into a top-five global cryptocurrency mining position by volume,” remarked ISW Holdings President and Chairman, Alonzo Pierce. “We control an ideal plot of land, to initiate the 1st phase with additional access to over 100 megawatts of power for use in crypto mining. We also have our close partner Bit5ive, LLC – North America’s largest provider of collective management of renewable, clean energy services and mining equipment – right on premises to manage and develop the mining operations at the site. China is cracking down hard and shutting down its domestic crypto mining industry. This has enormous consequences because more than half of the world’s cryptocurrency mining has been taking place in China. As a result, we are already fielding calls from mining firms seeking a new home. We are now equipped to handle this at scale. We have the power!”

ISW Holdings (OTCMKTS:ISWH) has reduced outstanding shares by nearly 25% and eliminated over $3.4 million (or 94%) of outstanding convertible debt in recent months. With this latest move, ISWH may end up as the biggest beneficiary of China’s crackdown.

 

HIVE Blockchain Technologies Ltd (OTCMKTS:HVBTF) owns state-of-the-art green energy-powered data centre facilities in Canada, Sweden, and Iceland which produce newly minted digital currencies like Bitcoin and Ethereum continuously on the cloud.

Its deployments provide shareholders with exposure to the operating margins of digital currency mining as well as a portfolio of crypto coins.

HIVE Blockchain Technologies Ltd (OTCMKTS:HVBTF) recently announce that trading of the Company’s common shares on the Nasdaq’s Capital Markets Exchange will begin on Thursday July 1, 2021, under the trading symbol ” HVBT “.

According to company materials, HIVE Blockchain Technologies Ltd. went public in 2017 as the first cryptocurrency mining company with a green energy and ESG strategy.

If you’re long this stock, then you’re liking how the stock has responded to the announcement. HVBTF shares have been moving higher over the past week overall, pushing about 19% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 10% in that time on strong overall action.

HIVE Blockchain Technologies Ltd (OTCMKTS:HVBTF) pulled in sales of $17.9M in its last reported quarterly financials, representing top line growth of 170.4%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($20.8M against $15.4M).

 

MicroStrategy Incorporated (NASDAQ:MSTR) provides modern analytics on an open, comprehensive enterprise platform used by many of the world’s most admired brands in the Fortune Global 500.

Optimized for cloud and on-premises deployments, the platform features HyperIntelligence, a breakthrough technology that overlays actionable enterprise data on popular business applications to help users make smarter, faster decisions.

MicroStrategy Incorporated (NASDAQ:MSTR) recently announced that it had purchased an additional approximately 13,005 bitcoins for approximately $489 million in cash at an average price of approximately $37,617 per bitcoin, inclusive of fees and expenses.

As of June 21, 2021, MicroStrategy holds an aggregate of approximately 105,085 bitcoins, which were acquired at an aggregate purchase price of approximately $2.741 billion and an average purchase price of approximately $26,080 per bitcoin, inclusive of fees and expenses. MacroStrategy LLC, a subsidiary of MicroStrategy, holds approximately 92,079 of the bitcoins.

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 20% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 39% in that time on strong overall action.

MicroStrategy Incorporated (NASDAQ:MSTR) generated sales of $122.9M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of -6.4% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($83.7M against $283.6M, respectively).

 

Riot Blockchain Inc (NASDAQ:RIOT) has become one of the most recognizable stocks in the crypto space, but shares have been sliding sharply of late. The company is expanding and upgrading its mining operations by securing the most energy efficient miners currently available. The company also holds certain non-controlling investments in blockchain technology companies.

Riot is headquartered in Castle Rock, Colorado, and the company’s mining facility operates out of upstate New York, under a co-location hosting agreement with Coinmint.

Riot Blockchain Inc (NASDAQ:RIOT) recently announced its May production and operational updates, including its unaudited Bitcoin production for May 2021 and its latest miner delivery status.

In May 2021, Riot produced 227 BTC, an increase of approximately 220% over its May 2020 production of 71 BTC. Year to date through May 2021, the Company produced a total of 924 BTC, an increase of approximately 101% over its pre-halving BTC production during the same 2020 period of 460 BTC. As of May 31, 2021, Riot held approximately 2,000 BTC, all of which were produced by its mining operations.

If you’re long this stock, then you’re liking how the stock has responded to the announcement. RIOT shares have been moving higher over the past week overall, pushing about 17% to the upside on above average trading volume.

Riot Blockchain Inc (NASDAQ:RIOT) generated sales of $23.2M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 338.4% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($275.6M against $7.4M).

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