Cryptocurrencies have been exhibiting significant volatility since the beginning of the year. The Fed’s forthcoming interest rate increases, and multi-year-high inflation are the primary reasons behind this volatility. Furthermore, the Russia-Ukraine war has also fostered volatility in cryptocurrencies. This, along with the stock market sell-offs, has led to many crypto-related stocks suffering a downtrend.
Last year was a breakout year for cryptocurrencies, which experienced significant volatility and delivered strong returns. Popular cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH), steered several investors to massive profits. Due to the growing popularity and acceptability of cryptocurrencies, President Biden this week signed an executive order to examine the risks and benefits of cryptocurrencies. The order has called on Federal agencies to take a unified approach in regulating and overseeing digital assets.
While the near-term prospects for digital currencies look uncertain, the executive order could renew investors’ attention on crypto stocks. Indeed, Wall Street analysts are bullish on crypto stocks Riot Blockchain, Inc. (RIOT) and CleanSpark, Inc. (CLSK). So, it could be wise to add these stocks to one’s watchlist.
Riot Blockchain, Inc. (RIOT)
RIOT is involved in cryptocurrency mining and the overall blockchain system through various investments. The Castle Rock, Colo.-based company has deployed approximately 8,000 application-specific integrated circuit miners at its cryptocurrency mining facility in Oklahoma. In addition, its subsidiary Tess Inc. seeks to develop a blockchain-based escrow service for wholesale telecom carriers.
On Dec. 1, 2021, RIOT announced that it had acquired Ferrie Franzmann Industries, LLC (ESS Metron) for roughly $50 million. ESS Metron designs and produces highly engineered electrical equipment solutions that are highly useful for deploying bitcoin mining operations at scale. This acquisition is vital for RIOT because it will likely complement its ongoing infrastructure expansion to 700 MW and significantly improve its internal engineering capabilities.
RIOT’s total revenue for its fiscal third quarter, ended Sept.30, 2021, increased 2,532.3% year-over-year to $64.80 million. The company’s mining revenue grew 2,099% year-over-year to $53.60 million. In addition, its adjusted EBITDA came in at $37.57 million compared to a $0.40 million loss in the year-ago period.
Analysts expect RIOT’s EPS and revenue for its fiscal year 2021 to increase 233.3% and 1,644.5%, respectively, year-over-year to $0.40 and $210.75 million. The stock surpassed the Street’s EPS estimates in three of the trailing four quarters. And over the past year, the stock has declined 70.7% in price to close the last trading session at $16.51. However, Wall Street analysts expect the stock to hit $44.75 in the near term, indicating a potential 171% upside.
CleanSpark, Inc. (CLSK)
CLSK in Woods Cross, Utah, provides bitcoin mining and energy technology solutions worldwide. The company provides software and technology solutions that are focused on solving modern energy challenges. It operates in the Digital Currency Mining and Energy segments. The Digital Currency Mining segment mines for bitcoin, while the Energy segment provides engineering, design and software, custom hardware, and other solutions for microgrids and distributed energy systems to military, commercial, and residential customers.
On Oct. 12, 2021, CLSK announced the purchase of 4,500 units of Antminer S19 bitcoin mining machine, partially funded through its bitcoin holdings. According to CLSK, its sustainable bitcoin mining capacity will increase by a computing power of 450 PH/S, equivalent to its current capacity, after the new machines are operational. New mining machines should help the company increase its revenues. CEO of CLSK Zach Bradford said, “By making a conscious effort to reinvest in additional production, we are taking a market-based approach to our mining operations and maximizing value for our shareholders.”
For its fiscal first quarter, ended Dec. 31, 2021, CLSK’s revenues increased 1,726.8% year-over-year to $41.24 million. The company’s adjusted EBITDA came in at $24.10 million, compared to a $2.74 million adjusted EBITDA loss in the year-ago period. Also, its net income came in at $14.48 million, compared to a $7.16 million net loss in the year-ago period.
For its fiscal year 2022, CLSK’s EPS and revenue are expected to increase 277.3% and 269.5%, respectively, year-over-year to $1.33 and $182.65 million. And over the past year, the stock has gained 58.8% in price to close the last trading session at $11.09. However, Wall Street analysts expect the stock to hit $23 in the near term, indicating a potential 107.4% upside.
RIOT shares were trading at $15.87 per share on Friday morning, down $0.64 (-3.88%). Year-to-date, RIOT has declined -28.93%, versus a -10.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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