Some crypto-mining stocks could be value plays for investors, while others could end up being value traps if the crypto winter drags on for a longer period, the investment manager focused on Valkyrie digital assets said in a report.
“Value stocks are those that will likely survive and rebound in price while value traps are those that will cease mining and likely never eclipse their prior high prices,” Valkyrie said in its outlook on miners.
Crypto mining stocks have fallen and some have lagged the price of bitcoin (BTC) over the past year, forcing them to sell their bitcoin holdings to shore up their balance sheets to weather the crypto winter. Participants also expect some mergers and acquisitions to occur.
Profitability will be key to survival, and miners with the lowest debt levels are more likely to emerge from the crypto winter, according to Valkyrie. Those with weaker balance sheets may also need to raise capital or cut capital spending, the company wrote.
Miners with smaller crypto holdings relative to their market capitalization include Hive Blockchain (HIVE), Bit Digital (BTBT), CleanSpark (CLSK), Stronghold Digital (SDIG), and Greenidge Generation (GREE). Valkyrie said this batch of miners could be seen as more “defensive” and less exposed to a drop in their liquid assets if crypto prices continue to fall.
Digihost Technology (DGHI), Hut 8 (HUT), Marathon Digital (MARA), and Core Scientific (CORZ) are those that hold larger crypto holdings relative to their market capitalization. This group is more exposed to a crypto rebound, according to Valkyrie.