Marathon Digital and Riot Blockchain, is it worth investing in cryptocurrency mining now?

  • Bears still dominate the cryptocurrency market;
  • MARA: formerly favourite, from November 2021, unloved child;
  • RIOT: falling knife;
  • Both stocks are cheap; call options with no expiry date;
  • Treat MARA and RIOT as cryptocurrencies; invest only the capital that you can lose.

It’s been a tough year for the cryptocurrency asset class. After the dizzying gains of the last few years, prices are lower in 2022 and the speculative frenzy has turned into disappointment for the laggards in this asset class.

While the continued boom and fall in crypto prices should come as no surprise, it was a bitter disappointment for those who jumped on board the uptrends in late 2021. Indeed, while some are still licking their wounds financials, others have already capitulated and sold so as not to lose even more on their cryptocurrencies.

Today we bring you two old favorites of the cryptocurrency boom, namely Marathon Digital Holdings (NASDAQ:) and Riot Blockchain (NASDAQ:). The listings of both mining companies have skyrocketed along with prices and other cryptocurrencies. However, in 2022, as digital currencies continued to decline, MARA and RIOT stock prices evaporated, both showing even worse percentage performance than Bitcoin and .

Rising energy prices have made mining more expensive and the fall of cryptocurrencies has worsened environmental poverty.

Because MARA and RIOT are now below 10 dollars. per share, the downside zone is limited. However, the growth potential may be attractive if there is a cryptocurrency rebound on the horizon.

Bears still dominate the cryptocurrency market

Bitcoin and Ethereum prices are still near recent lows, well below mid-November 2021.

Source: bar chart

The chart above shows that as of June 10, Bitcoin was at $3,230 to just over $29,150. above the May 12 low. At press time, the major cryptocurrency is trading even lower at $24,752, just a hair above the 52-week low; now it’s also $44,173. below the November 10 peak.

ETH/USD Daily

Source: bar chart

At $1,675 on June 10, Ethereum just hit a new low, but is now even lower at $1,280, hovering just above its current new low. The token is also $3585. below the November 10 peak.

Cryptocurrency mining requires a lot of computer power, which requires a significant amount of energy. The combination of low cryptocurrency prices and exorbitant energy costs makes cryptocurrency mining a loss-making proposition under current conditions.

MARA: once favorite, from November 2021, unloved child

Marathon Digital Holdings (MARA) is a Las Vegas-based digital asset technology company that mines cryptocurrencies and focuses on the blockchain ecosystem and digital asset generation.

As Bitcoin and other digital currencies boomed in 2021, MARA shares hit lows and highs.

MARA weekly 2019-2022

Source: bar chart

The chart shows that MARA shares peaked at $83.45 on November 9, 2021, the day before Bitcoin, Ethereum and other cryptocurrencies hit all-time highs. As of June 10, Bitcoin was 57.7% below its mid-November peak and Ethereum was down 65.6%. Both are now even lower.

During the same period, MARA stock plunged 91% to close at $7.54 on Friday, June 10.

RIOT: the falling knife

Riot Blockchain Inc. (RIOT), based in Castle Rock, CO, uses its knowledge and network to build and support blockchain businesses. The company description states that RIOT is:

Establish an advisory board with technical expertise that aims to become a leading authority on and proponent of blockchain while providing investment exposure to the rapidly growing blockchain ecosystem“.

Like MARA, RIOT is a cryptocurrency mining company.

While MARA hit higher highs in 2021, RIOT failed to reach its lower high until mid-November, meaning trouble was already on the horizon.

Weekly RIOT 2019-2022

Source: bar chart

The RIOT maximum occurred on February 17, 2021, when the price was $79.50. per share. As of Friday, June 10, shares closed at $5.17, or 93.5% below their 2021 high.

Both stocks are cheap; call options with no expiration date

While in November 2021 the price performance of Ethereum and many of the over 19,800 cryptocurrencies was nothing short of horrifying, the returns of MARA and RIOT can only be described as terrifying. With a price of around $120. per barrel and at the highest price in fourteen years, energy prices are simply sky-high, driving up costs of extraction even as cryptocurrency prices near their latest lows.

Both MARA and RIOT shares have fallen to levels where the downside is limited, but the upside potential may be compelling. I see both stocks as call options with no expiration date of June 10 at $7.54. and $5.17.

Treat MARA and RIOT as cryptocurrencies; invest only the capital you can lose

When considering MARA and RIOT buys, remember that even if there is no downward movement, companies can run out of capital and go bankrupt.

MARA’s capitalization at Friday’s close was $801.57 million and RIOT’s capitalization was $699.75 million. I see RIOT and MARA as assets that reflect the same risk as Bitcoin, Ethereum, and many other cryptocurrencies. Any investment in these shares may result in the total loss of your invested capital.

Risk is always a function of potential rewards. MARA and RIOT can be inexpensive with many promising benefits, but they can also become a worthless item in your portfolios if cryptocurrencies and the mining that produces them do not see a significant rebound.

This article has been compiled solely for Investing.com

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