August is often one of the most interesting months of the financial year for money managers because it sets the tone for the fall trading season and the run into the end of the year – with lucrative performance bonuses hanging the balance. When August is rough, it signals a time of caution later in the year because burned money managers instinctively “turtle” to protect their winnings.
But when it isn’t, it holds the potential to foster greater leverage in front of the statistically best period of the calendar for risk assets – from late October to the Christmas holiday.
This year, risk assets were favored in August. But it may surprise you to learn which asset was most favored during this stretch. Hint: it wasn’t the Nasdaq or Oil or Gold or Bonds. It was the crypto space. Bitcoin, Ethereum and other cryptocurrencies rocketed into a leadership position, fueled in part by more major companies – such as Visa and Walmart – signaling they would be expanding adoption, sending the likes of Bitcoin to 20-percent-plus in single-month gains.
This trend of increasing institutional acceptance is at the heart of the trend for crypto investors, who continue to “HODL” with long-term gains in mind. And there are no signs of a slowdown in the rate of adoption by the establishment at present, suggesting this same dynamic could come to shape the rest of the year, as it did last year.
In case you forgot, Bitcoin was up 147% during the period from September through December in 2020. Investors are often primed by recent performance, so it may behoove market participants to keep the crypto space in mind as we kick off the fall. Importantly, when Bitcoin rallies, stocks in the space often offer outsized opportunities. For example, during that same period last year, Riot Blockchain Inc (NASDAQ:RIOT) rallied nearly 400%.
Some names to consider in this equation are discussed here.
HIVE Blockchain Technologies Ltd (NASDAQ:HVBT) is a central name in the space and a good place for investors to focus when keying off this theme. The stock is up about 1,000% over the past year, but has consolidated over the past 6 months.
The company engages, according to its materials, in building a bridge from the blockchain sector to traditional capital markets. HIVE owns state-of-the-art, green energy-powered data center facilities in Canada, Sweden, and Iceland. The company touts its shares as a source of exposure to the operating margins of digital currency mining, as well as a portfolio of cryptocurrencies such as ETH and BTC.
HIVE Blockchain Technologies Ltd (NASDAQ:HVBT) recently announced that it just achieved its target of 1 Exahash per second (EX/s) of Bitcoin mining hashrate.
“This is a monumental achievement for us as we continue to our goal of over 3 EX/s by the end of fiscal 2022, including the conversion of ETH, a goal which is greatly supported by today’s announcement of new miner deliveries,” Frank Holmes, Executive Chairman of HIVE continued, “This achievement has been challenging because of the global shortages in chips and logistics delays in shipping equipment from Asia due to Covid 19.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. HVBT shares have been moving higher over the past week overall, pushing about 3% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 18% in that time on strong overall action.
HIVE Blockchain Technologies Ltd (NASDAQ:HVBT) managed to rope in revenues totaling $17.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 170.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($20.8M against $15.4M).
ISW Holdings (OTC US:ISWH), oddly enough, could be the most interesting name covered here. The company is a relative newcomer in the space, and the market may not have given the stock its due as of yet given its huge gains in market position and its blue-chip roster of partnerships.
ISWH – which has filed for a name and ticker change to “BlockQuarry” – frames itself as an emerging leader with a growing commitment to blockchain infrastructure, cryptocurrency mining, and collaborative hosting. It has partnerships with Bit5ive, Minerset, and the global leader, Bitmain Technologies.
ISW Holdings (OTC US:ISWH) announced this morning an update on its pending corporate name and trading symbol change, its path toward maximizing mining performance in Pennsylvania, and its strides toward further cancellations of outstanding convertible debt pursuant to its shareholder friendly initiative announced last fall.
In short, the filings for the name and symbol change are now actively going through FINRA, and the company promises more details as soon as FINRA has completed its due diligence process. The company also noted that it has switched on its mining operations in Pennsylvania. The miners there are now running at 90 percent operational efficiency, and it is approaching its target hashrate at this location of 54000 TH/s. Management reports being pleased with the smooth operations at the site and looks forward to substantial revenue production from this property over coming months and quarters.
In terms of its quest to completely eliminate the risk of dilution through convertible debt, the company reports that total derivative liabilities were reduced 96% in the first six months of the year to under $750k, and it is working hard to continue this trend with recent cancellations and negotiations to cancel more variable convertible notes to eliminate another 500,000 shares of potential dilution. Further updates will be coming soon to communicate more details on this theme.
ISW Holdings (OTC US:ISWH) president, Alonzo Pierce, noted, “As we see our mining efficiency begin to approach optimum levels for our current capacity, we are making strides toward rebranding our stock to better reflect what we are building here. When we began this pivot last year through our partnership with Bit5ive, we had tremendous conviction in the future role that cryptocurrency would play in the world. At the time, Bitcoin was trading under $10k. It is now 5 times that level with strong future growth potential as the dominoes of institutional and mainstream acceptance continue to tip in our favor. This backdrop has also allowed us to make good on our pledge to systematically eliminate dilution risk along the way.”
Marathon Digital Holdings Inc (NASDAQ:MARA) is one of the most recognizable names in the crypto mining space at this point.
The company is a digital asset technology player that engages in mining cryptocurrencies, with a focus on the blockchain ecosystem and the generation of digital assets.
Marathon Digital Holdings Inc (NASDAQ:MARA) recently announced an expanded collaboration with NYDIG, a leading technology and financial services firm dedicated to Bitcoin, to provide members of Marathon’s Bitcoin mining pool, MaraPool, with seamless access to NYDIG’s comprehensive and institutional-grade services for Bitcoin miners.
MaraPool is a bitcoin mining pool based in the United States focused on carbon neutral mining and reducing the environmental impact of Bitcoin mining. The pool provides its members with industry-leading transparency and is fully audited by a third-party firm based in the U.S. Through the new collaboration with NYDIG, members of MaraPool will now also benefit from access to NYDIG’s products and services for Bitcoin miners, including equipment procurement, financing, investment vehicles, advisory services, and more.
“NYDIG has been an important collaborator of ours, providing a variety of treasury management and trading services, including facilitation of the purchase of 4,812.66 bitcoins in January,” said Fred Thiel, Marathon’s CEO. “NYDIG’s team shares our passion for professionalizing and institutionalizing the Bitcoin mining industry in the U.S., and by collaborating with NYDIG on our mining pool, we have enabled all members of our pool to have access to the same world class solutions and expertise from which Marathon has benefitted.”
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 7% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 43% in that time on strong overall action.
Marathon Digital Holdings Inc (NASDAQ:MARA) managed to rope in revenues totaling $29.3M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 10146.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($366.5M against $3.3M).
Other key names in the space include MicroStrategy Incorporated (NASDAQ:MSTR), Paypal Holdings Inc (NASDAQ:PYPL), Bit Digital Inc (NASDAQ:BTBT), and Grayscale Bitcoin Trust (Btc) (OTCMKTS:GBTC).
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