Banking & Finance

Can the 'Bitcoin Stocks' Really Stay (or Come Back) Bitcoin Winners?

Jon C. Ogg
The Tracking Stock/Trust

There is also the Bitcoin Investment Trust (GBTC) under Grayscale Investments. According to Reuters, it issues creation baskets from time to time in exchange for deposits of bitcoins and distributes bitcoins in connection with redemption baskets. This may trade like an exchange traded fund in some minds, but there is no mechanism there that keeps its share price in line with its underlying net asset value. That means it can trade at a big premium to its real value, and the flip side is that it could trade at a huge discount if everyone started fearing that bitcoin’s real value was a tiny fraction of today’s prices.

This trust has also recently resumed private placements of unregistered shares. After the over-the-counter shares closed down over 9% at $1,649.90 on Friday, Bitcoin Investment Trust is shown to have a market cap of $2.8 billion. The 52-week trading range is $100.00 to $1,905.55.

Moving to Blockchain

Riot Blockchain Inc. (NASDAQ: RIOT) has become quite popular among day traders and speculators, buts its volatility should speak for itself. Its shares rose 8% to $15.85 on Friday alone, with an intraday range of $14.50 to $16.23 on almost 4 million shares traded. Its $132 market cap is also too small for most investors to consider, and the 52-week range of $6.33 to $24.00 should speak for volatility.

Riot Blockchain changed its name from Bioptix under the old BIOP ticker and changed its model to move away from medical diagnostic equipment sales. Companies making night-and-day business model shifts usually deserve much more scrutiny than companies with the same business model for many years. In October, the company changed names to Riot Blockchain to focus on blockchain technologies and investments. It has made investments in Coinsquare, TESS and Verady, and it made a release in early November that it had acquired 1,200 bitcoin mining machines made by Bitmain Technologies. Its short interest skyrocketed after changing names, rising from a few thousand shares to over 600,000 in mid-November.

Patents

Marathon Patent Group Inc. (NASDAQ: MARA) became a go-to name among day traders and speculators as it has acquired mining company Global Bit Ventures. Its shares fell almost 4% on Friday to $4.41, with a market cap of $44 million. Trading volume was 2.1 million shares on Friday, and the 52-week range of $0.52 to $10.03 is only the start of how volatile this outfit shares have been. The $10.03 high was on November 27, but this was a $1.42 stock on November 21, and its highest closing price has been $6.50, with only two days close to $6.00. If you want an example of a craze: Marathon Patent Group traded more than 40 million shares on November 24 and again on November 27.  What does a return to 2 million shares in trading volume mean?

The company’s own description notes that it acquires patents and patent rights and monetizes them by entering into license discussions. As of December 31, 2016, it reportedly owned 515 patents. In prior years the company was formerly known as American Strategic Minerals. In 2016, it had revenues of $36.6 million (almost up 100% from 2015) but posted an operating loss of almost $5.6 million.

Mining, Speculative Mining

MGT Capital Investments Inc. (MGTI) recently gave an update on its cryptocurrency mining, noting that it had executed a new purchase order for an additional 500 S9 Antminer mining rigs with Bitmain Technologies. Their shipment is now expected early in the first quarter of 2018, and MGT’s bitcoin mining operations will be comprised of over 5,000 Bitmain S9s. The company said that these machines are expected to generate roughly 70 Ph/s of total hash power, and over $4.0 million in monthly revenue, assuming current bitcoin pricing and difficulty rates. MGT has tech pioneer John McAfee as its leader, and he is always good for colorful commentary. At $2.74 a share, it has a 52-week range of $0.46 to $4.26, and the market cap is $134 million.

U.S. Global Investors Inc. (NASDAQ: GROW) has seen its shares surge late in 2017. This is a boutique registered investment advisory firm. Barron’s has noted that the company mines bitcoin in Iceland where electricity is cheap. Its shares went from under $1.50 in September up to over $5 briefly at the end of November. U.S. Global Investors has a 52-week trading range of $1.25 to $6.90, as well as a mere $60 million market cap. TheStreet.com recently pointed out this company as well.

That’s pretty much it on the companies that are staking their futures, or which have exposure to, bitcoin, cryptocurrencies and blockchain. There are of course some others that trade on pink sheets and foreign exchanges, but this list should be speculative enough for even the most aggressive traders, speculators and day traders, and even short sellers. Enter at your own risk, and both buyers and sellers beware.