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4 Crypto Stocks to Watch as Bitcoin Miners Rally in 2023

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Bitcoin mining involves the process of validating and recording transactions on the Bitcoin network. By digitally validating transactions in an attempt to prevent fraud and adding new blocks to the blockchain ledger, mining helps create new Bitcoins in a decentralized way.

Historically, it has been observed that bitcoin mining may remain profitable even during down markets for cryptocurrencies, while they habitually prosper when things are looking up. In a sense, by lending credence to cryptocurrency, bitcoin miners have assumed a defensive nature in the world of crypto.

There are obvious sectoral headwinds like high production costs and lower revenues per block mined that miners face during a downturn. However, in a year where the price of Bitcoin (BTC) has gone up 74.6% as of Aug 1, these overheads can be offset.

There is a bigger problem on the horizon though, with the scheduled April 2024 halving lurking around the corner. The halving is a planned reduction of Bitcoin emissions in each block and takes place every four years. This entails miners to deal with the sudden shock of revenues falling down by exactly half.

However, because of its non-sudden nature, bitcoin miners have had a chance to prepare for the event. They have resorted to selling to improve their cashflows and sending large amounts of BTC to exchanges as a part of the de-risking strategy. For example, selling BTC one-year futures allows miners to lock in a selling price of $30,000 for the next year.

So, with a “crypto spring” in the offing in 2023 and bitcoin miners already preparing their strategies for next year’s halving, it would be prudent to watch a few bitcoin mining stocks that have done exceedingly well this year.

Hut 8 Mining Corp. (HUT - Free Report) : This cryptocurrency mining company from North America provides computing power to the mining pools in exchange for digital assets. It is one of the world’s largest crypto mining companies, and its shares have soared 318.8% year to date (as of Jul 31).

Hut 8’s expected earnings growth rate for the current year is 50%. The company currently carries a Zacks Rank #3 (Hold).

Stronghold Digital Mining, Inc. (SDIG - Free Report) : This is a crypto asset mining company that focuses on mining Bitcoin in the United States. Its shares have climbed 85.2% year to date (as of Jul 31).

Stronghold Digital Mining’s expected earnings growth rate for the current year is 92.7%. Stronghold Digital Mining currently carries a Zacks Rank #2 (Buy).

HIVE Digital Technologies Ltd. (HIVE - Free Report) : This cryptocurrency mining company operates in Canada, Sweden and Iceland. It engages in the mining and sale of digital currencies. Its shares have surged 276.4% year to date (as of Jul 31).

HIVE’s expected earnings growth rate for the current year is 78.1%. HIVE currently carries a Zacks Rank #2.

MicroStrategy Incorporated (MSTR - Free Report) : This is an enterprise analytics software and services provider operating in the United States, Canada, Europe, the Middle East, Africa, and globally. Among other activities, MicroStrategy mines, holds and acquires Bitcoin. Its shares have jumped 209.3% year to date (as of Jul 31).

MicroStrategy’s expected earnings growth rate for the current year is 125.7%. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bottom Line

Bitcoin mining companies have been rallying in 2023. Being regulated by the Securities and Exchange Commission, these companies project “stability” to investors on a perception level, an attribute uncommon to the volatile crypto market. The above-mentioned stocks have been on a constant curve upward and must be tracked as the crypto market continues to rebound.

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