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The story around bitcoin continues to evolve and has enormous implications for stocks in the space, including Riot Blockchain Inc (NASDAQ: RIOT), HIVE Blockchain Technologies Ltd (OTC US: HVBTF), Exxe Group Inc (OTC US: AXXA), and Marathon Patent Group Inc (NASDAQ: MARA).
According to a CNBC article out this week, the network-effect momentum toward increasing mainstream adoption for Bitcoin could be set to rise up another significant notch over coming months.
The key step, according to the piece, is a program through cryptocurrency custody provider NYDIG that will allow hundreds of banks to offer crypto services whereby customers will be able to buy, hold and sell bitcoin through their existing accounts.
From one model of thinking, this process could directly drive further value and price momentum in the leading virtual currency.
Many of the banks that have already reportedly enrolled to take part in the program are smaller boutique or regional banks. But the service offering could steer business and put pressure on larger banks like the systemically important brands like JPM and BAC to start offering a similar level of accessibility, which would further drive the same strong network effect into play.
The network effect is the main driver, by many accounts, of cryptocurrency value. Currencies are only really value to the extent they can function as a medium of exchange. And that function has primacy over the store-of-value idea – in other words, bitcoin only works as a store of value because it can be predicted to have a widening applicability as a currency.
The one is dependent on the other, and the other is dependent on the network effect – ie, the more established it becomes, the more valuable it can become.
That has enormous implications for stocks in the space.
Riot Blockchain Inc (NASDAQ: RIOT) is one of the most obvious plays in the space.
The company holds non-controlling investments in blockchain technology companies and is one of the most readily identified on any list of stocks in the crypto space. It’s a mainstay for traders in the space at this point, and for good reason. The companys primary mining facility is located in Massena, New York under a colocation agreement with Coinmint.
Riot Blockchain Inc (NASDAQ: RIOT) recently announced an operations update that includes an unaudited Bitcoin production and an unaudited BTC holdings update, through March 2021.
The company posted huge gains in mining results. In March 2021, Riot produced 187 BTC, an increase of 80% over its pre-halving March 2020 production of 104 BTC. In Q1 2021, the Company produced 491 BTC, an increase of 75% over its pre-halving Q1 2020 production of 281 BTC. As of March 31, 2021, Riot holds over 1,565 BTC on its balance sheet, all of which was produced by its mining operations.
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasnt been the type of action RIOT shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -17% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -24%.
Riot Blockchain Inc (NASDAQ: RIOT) pulled in sales of $5.3M in its last reported quarterly financials, representing top line growth of 340.7%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($235M against $2.4M).
HIVE Blockchain Technologies Ltd (OTCMKTS: HVBTF) is another clear mainstay in the crypto mining investment game.
HIVE 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…