2023-6-8 18:43 |
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There are many different avenues through which investors can gain exposure to the volatile swings of Bitcoin. One such medium is Bitcoin mining stocks, many of which are companies which trade publicly. This avoids having to store the Bitcoin yourself, and can also be easier from a regulatory or reporting point of view, especially for certain institutional clients.
On the latest episode of the Invezz podcast, Wade Guenther, partner at asset management firm Wilshire Phoenix, discusses investing in mining stocks.
Watch here: https://www.youtube.com/embed/RJP266xVriE?feature=oembedMining stocks have had a rough ride in recent times. The cost of electricity has soared amid an energy crisis over the last year, while the price of Bitcoin is 60% off its highs from late 2021.
That means a perfect storm of elevated costs and falling revenue has sliced into miner margins, with share prices plummeting accordingly. In fact, the sector has underperformed Bitcoin significantly through the bear market.
Guenther chats through different aspects of the mining business, including the reserves these companies hold on their balance sheet, which typically tend to be Bitcoin heavy. There is also a discussion around the location of miners and where the industry could land in the future.
In addition to mining, other proxies and Bitcoin-correlated investments are discussed, including MicroStrategy and Coinbase. The former is essentially a Bitcoin holding vehicle at this point, while Coinbase is less of a proxy for Bitcoin but still highly correlated with its price, given higher volumes (and fees) tend to be realised when Bitcoin is performing well.
Of course, it is difficult to discuss anything related to crypto right now and not touch on regulation. Coinbase and Binance were sued by the SEC in the days preceding this recording, and Guenther gives his opinion on how this will affect both the mining space and the industry at large.
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