Shares of crypto-mining companies continued their monstrous run today amid a more favorable jobs report that did little to quell investor concerns about more interest rate hikes ahead.
Shares of CleanSpark(NASDAQ: CLSK) traded nearly 14% higher as of 12:51 p.m. ET today. Meanwhile, shares of Riot Platforms(NASDAQ: RIOT) also traded nearly 14% higher, while shares of Hut 8 Mining (NASDAQ: HUT) were up almost 10%.
The price of the world's largest cryptocurrencyBitcoin(CRYPTO: BTC), which most cryptocurrencies and crypto-related stocks trade relative to, has had a bumpy week. It had been doing OK until yesterday, when ADP reported that U.S. private payrolls added close to 500,000 jobs in June.
While normally positive, strong jobs reports have been perceived in a negative light this year because a hot labor market could point to persistent inflation, which could mean the Federal Reserve needs to hike interest rates more to cool inflation. Rising interest rates have typically not been good for Bitcoin and other crypto assets.
But this morning, the U.S. Bureau of Labor Statistics reported that nonfarm payrolls in the U.S. added 209,000 jobs, well below estimates and showing some signs of a cooling labor market, although wage growth remained strong.
Traders are still betting on a quarter-point hike at the Fed's upcoming meeting this month, but I do think this jobs report does provide a sigh of relief after yesterday's ADP report. Treasury yields also were down today, as of this writing.
In more company-specific news, Hut 8 announced yesterday that it had mined 120 Bitcoin in June and also sold 270 Bitcoin during the month for $7.9 million. Hut 8 also said it had been busy last month, improving some of its mining facilities and entering into a $50 million credit facility with Coinbase.
"June was very productive, with key developments across our mining and high-performance computing operations businesses, and progress on obtaining key regulatory approvals related to the merger with USBTC," Hut 8's CEO Jaime Leverton said in a statement. "We are committed to keeping that momentum going as we work diligently at closing the transaction with USBTC."
Bitcoin-mining stocks have had a tremendous year: CleanSpark is up close to 202%; Riot is up almost 356%; and Hut 8 is up almost 362%. This compares very favorably to Bitcoin's nearly 83% gain.
Bitcoin miners tend to be more volatile than Bitcoin itself, experiencing more violent swings in their share price. But the miners have also benefited from increased transaction fees in the second quarter of this year, which can be attributed to the price of Bitcoin rising and the creation of BRC-20, a new token protocol on Bitcoin's blockchain that enabled the creation and transfer of non-fungible tokens (NFTs).
Ultimately, I like Bitcoin and believe it's an asset worth having at least some exposure to in your portfolio, as we've seen Bitcoin perform well in some unique situations, such as when the dollar drops and during bank crises.
While the Bitcoin miners should continue to benefit if Bitcoin does well, crypto has now had a big rally, so if Bitcoin slows, the miners could take a bigger hit. This is why you should be prepared for more volatility if you own the miners.
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