Alarm bells are ringing again in the cryptocurrency space despite Bitcoin nearly touching US$67,000 at one point during trading on October 20, 2021. As of this writing, the price is down to US$60,22.14. Crypto investors must be worried about a potential steep correction.
The world’s most popular cryptocurrency peaked first on December 17, 2017, before going on a tailspin and eventually collapsing. We’re not sure if history will repeat, although the patterns in 2021 are identical to the event of four years ago.
On the TSX, Hive Blockchain Technologies (TSXV:HIVE)(NASDAQ:HVBT) and Hut 8 Mining (TSX:HUT)(NASDAQ:HUT) are high-growth stocks. Thus far, in 2021, the former’s gain is 971%, while the latter is up 1,154.00%. If Bitcoin’s downtrend continues, will it impact HIVE and HUT negatively?
Based on a survey commissioned by fintech company Hardbacon, three out of 10 Canadians invest in or hold cryptocurrencies in their portfolio. However, investors who want exposure to Bitcoin without owning digital wallets turn to crypto stocks.
The decision is paying off in 2021 because both stocks have delivered enormous returns. A $10,000 investment in HIVE on year-end 2020 would be worth $107,058.82 today. For HUT investors with the same amount invested, the value would be $125,378.15. However, the dilemma is whether to buy or sell before they mirror Bitcoin’s performance.
In Q1 fiscal 2022 (quarter ended June 30, 2021), HIVE reported a 466% increase in gross revenue from digital currency mining versus Q1 fiscal 2021. The quarter’s highlight, however, was the record quarterly income of US$18.6 million. It was 11% better year-over-year and 30% higher compared to Q4 2020.
Frank Holmes, HIVE’s Interim Executive Chairman, said, “We have achieved record results and continued to increase our Ethereum and Bitcoin mining capacity.” He stresses that HIVE achieved this notwithstanding COVID-19’s effects and supply chain-related issues.
The latest buzz from the $1.8 billion crypto miner is its entry into the emerging non-fungible token (NFT) business. HIVE will invest C$450,000 investment in award-winning media production company Network Entertainment. It will be its vehicle to gain exposure to NFTs.
Leadership in digital asset infrastructure
HUT 8 met the financial and liquidity requirements of the Nasdaq Global Select Market to complete its listing on NASDAQ in June 2021. Moreover, the financial results in the first half of 2021 (six months ended June 30, 2021) were impressive.
Management reported revenue growth of 198% compared with the same period in 2020. From a net loss of C$7.4 million, HUT 8 posted C$15.1 million in net income. CFO Shane Downey said, “Hut 8’s disciplined approach to managing our balance sheet while prioritizing the efficient accumulation of Bitcoin served us well in Q2 2021.”
Downey adds the goal is to become a diversified leader in the digital asset infrastructure space. The $2.69 billion crypto mining company expects a substantial increase in power capacity with its power purchase agreement (PPA) and Validus Power The initial phase of the new power facility should be operational in late Q4 2021.
Unlike Bitcoin, HIVE and HUT 8 reports quarterly results. You can make decisions based on their financial performance. The numbers are impressive numbers so far.