Banking, finance, and taxes

Bitcoin Trackers Not Universally Tracking Bitcoin

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The rise of bitcoin has come back into focus now that the digital asset briefly rose above $18,000. Less than a month ago, it was under $12,000. A 50% gain in less than a month is going to raise some eyebrows, no matter what the asset is and no matter what the logic happens to be behind the asset. In macro investing with all asset classes and geographies on the table, the longstanding rule is that capital seeks opportunity and it generally ends up where it is treated the best.

Whether bitcoin has entered into another speculative bubble or has become a permanent asset class destination remains to be seen. It can be argued both ways, and it’s no secret that bitcoin and other cryptocurrencies and crypto-related assets have seen their share of ups and downs.

The question now is whether the secondary assets behind bitcoin and the major cryptocurrencies have more room to run or have already run into a wall.

24/7 Wall St. has tracked the movements of bitcoin and many of the subsequent companies, exchange-traded funds, crypto-rivals and so on over the years. The long and short of the matter is that some of these have continued to blossom while many others have experienced the equivalent of a high-altitude flameout.

Riot Blockchain Inc. (NASDAQ: RIOT) was barely at $4.00 a few days ago, but its stock hit a 52-week high of $6.44 earlier on Wednesday. So what if it was last seen down over 7% at $5.62 on Wednesday? Its focus is on the blockchain technologies ecosystem, and it is involved in mining digital currency. Earlier in November, Riot Blockchain said that the first nine-month period of 2020 saw revenue by 21% to $6.7 million and its mining revenue margin rose to 38% from 18% compared with the same period in 2019. The company also had claimed to have increased liquidity to $39.1 million in cash and cryptocurrencies from just $11.3 million at the end of 2019. Riot Blockchain’s market cap was about $285 million on last look.

Marathon Patent Group Inc. (NASDAQ: MARA) has been positive about its ability to mine bitcoin and generate revenues. Its target is to have more than 23,500 cryptocurrency miners deployed in 2021 with a target of mining 15 to 20 bitcoins per day. It reportedly expects an average mining cost of about $3,863 per bitcoin, which could generate roughly $6.7 million in monthly gross profits. Marathon Patent’s shares were last seen up 4.2% at $3.23, but its 52-week range is $0.35 to $5.25.

Square Inc. (NYSE: SQ) was deemed to be a crypto-winner in the past. Its third-quarter earnings report was above expectations. The payment processing service’s Cash App is used for peer-to-peer payments, and for trading stocks and bitcoin. Square was down almost 1% mid-Wednesday at $186.10, and it has a trading range of roughly $170 to $200 since early November. This stock was roughly at the same price as now a month ago. Inc. (NASDAQ: OSTK) was seen down 1% at $57.69, but its 52-week range of $2.53 to $128.50 should tell a lot. With primary operations as an online retailer, it has been a COVID-19 shut-in winner. The side efforts include investments in bitt and tZero in cryptocurrencies.

Ebang International Inc. (NASDAQ: EBON) is a Chinese maker of Bitcoin mining machines. it came public this summer in a $100 million IPO at $5.23 per ADS. It was last seen down 3% at $7.29, but its post-IPO trading range has been $3.80 to $14.95.

The Grayscale Bitcoin Trust (GBTC) was last seen up about 1% at $20.35, but its 52-week high of $20.73 was this morning, and that’s up from a 52-week low of $5.01. This is still over the counter (OTC), but its Grayscale Investments is considered to be a top digital currency asset manager. The company’s most recent press release indicated that Grayscale Investments had more than $7.3 billion in assets under management. There are other assets listed under Grayscale as well:

  • Grayscale Digital Large Cap Fund LLC (GDLC), −3.3% at $16.13
  • Grayscale Ethereum Trust (ETHE), −0.4% at $70.04
  • Grayscale Ethereum Classic Trust (ETC) (ETCG) was up 6% at $7.67
  • Grayscale Litecoin Trust (LTCN), −12% at $240.00

The Bitcoin Fund is Canadian and trades under the ticker QBTC in Toronto. The company recently completed a successful overnight treasury offering of 2.85 million class A units with gross proceeds of approximately C$75.6 million. Toronto trading showed it up 0.5% at C$28.17 mid-Wednesday, and that is up from C$22 to C$23 a month ago.

HIVE Blockchain Technologies Ltd. (HVBTF) is now back as an OTC stock, but it was up over 5% at $0.498 midday on Wednesday. Its range in the past year is $0.06 to $0.54. The shares were exponentially higher back in 2017.

Hut 8 Mining Corp. (HUTMF) is also a Canadian cryptocurrency miner. It is OTC, or trades in Canada, but the U.S. price was last seen down 7% at $0.97.

Lastly, Nvidia Corp, (NASDAQ: NVDA) has been of interest for its processors and cards being used in crypto-mining efforts. That said, Nvidia is far wider than just crypto, and it reports earnings on Wednesday as well. Its shares were last seen up 0.7% at $540.90.

The reality is that bitcoin and other cryptocurrencies can have an influence on companies, funds and entities that rely heavily upon blockchain and crypto efforts. That said, there are many companies which were making grandiose press releases around this effort two and three years ago and many of them flopped.

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