The Federal Reserve raised interest rates this week, by another 0.75%, tightening its anti-inflation stance. At the same time, Fed Chairman Jerome Powell indicated that the central bank may slow the pace of rate hikes, giving some hope of a “soft landing”, which could curb inflation while avoiding a deep recession. Markets rose sharply in response to the Fed news.
The rally has also come to crypto, which has followed US stocks closely this summer. In particular, the biggest crypto, Bitcoin, is up 21% this month.
Nexo crypto wallet co-founder Antoni Trenchev sees these developments as net gains, predicting further short-term rally in BTC in his Fed meeting comments: “The conclusion of Wednesday’s Fed meeting opens up a summer window for a Bitcoin relief rally, given that we now have two months until the politicians next consider monetary policy.”
So it’s an interesting time to watch bitcoin mining stocks, which are highly correlated with the price of BTC. Using the TipRanks database, we identified two such stocks that have received bullish praise from the Street, enough to earn a “Strong Buy” consensus rating. Let’s take a closer look.
The first bitcoin miner we’ll look at is CleanSpark, a company with a dual-barreled focus – one barrel aimed at bitcoin mining and the other aimed at clean energy. CleanSpark produces software products that allow tight control of distributed energy systems, microgrids and other off-grid power systems based on “green” energy such as solar, wind or nuclear power. In CleanSpark’s particular case, it uses this technology to power its bitcoin mining operations.
These bitcoin mining operations are significant. CleanSpark currently operates four mining facilities, in Texas, Georgia and New York, and this month announced an expansion of its mining capacity totaling 90 petahashes. This expansion was driven by the acquisition of new, ‘last generation’ mining servers, 1061 Whatsminer M30S machines, installed a facility partnered with Coinmint. In addition, CleanSpark also announced, in June, the acquisition of a purchase contract for 1,800 Antminer S19 XP machines, along with water cooling infrastructure, for its mining facilities. These machines, once installed, will add an additional 252 petahashes per second to CleanSpark’s mining capabilities.
By the end of June, CleanSpark’s BTC production had totaled 1,863 for the year. June’s production was 339, and production reached an all-time high of 12.1 BTC per day. Hash rate increased 12% from May, to a total hash rate of 2.8 EH/s. CleanSpark had a total of 561 BTC as of June 30, having converted 328 to pay for June operations.
Manufacturing on this scale generated revenue of $41.6 million in the quarter ended March 31, compared with just $8.1 million in the year-ago quarter.
Assuming coverage of CLSK for HC Wainwright, analyst Mike Colonnese likes what he sees in the company’s prospects for continued growth.
“With a strong track record of solid execution and 600 megawatt (MW) mining infrastructure already secured (capable of supporting ~20 EH/s), we are confident in CLSK’s future growth and ability to continue to gain market share. As a top five miner with 2.8 EH/s active hash power, CLSK produced 339 BTC in the month of June (over 11/day) According to our calculation, this makes CLSK the most efficient bitcoin miner in the industry (with an active EH/s) >1) ,” Colonnese opined.
“We believe the risk/reward profile for shares in CLSK is very favorable at current levels,” the analyst summed up.
To that end, Colonnese rates CLSK stock as a buy, and his $6 price target implies a one-year potential gain of ~43% for the stock. (To see Colonnese’s track record, click here)
Overall, this small-cap bitcoin miner has a Strong Buy consensus rating from Wall Street analysts, and that rating is unanimous, based on 3 recent positive analyst reviews. The stock is selling for $4.20 and the average price of $11.00 indicates a possible gain of ~162% in the coming year. (See CLSK stock forecast on TipRanks)
Argo Blockchain (ARBK)
Next up is Argo Blockchain, a crypto mining company based in London with operations in North America. Argo has three active crypto mining facilities, one, Helios, located in Dickens County, Texas, and two in Quebec, at Baie Comeau and Mirabel. The Mirabel facility is the smallest and the Texan site the largest; in total, Argo boasts around 45 megawatts of power generation supporting 2.2 EH/s bitcoin mining and 280 MS equihash ZCash mining.
Last month, the company mined a total of 179 bitcoins, a 44% increase over May’s total of 124. The company sold 637 bitcoins during the month to fund operations. These operations included the ongoing expansion of the Helios chalk pomination facility. Argo entered into a contract for the supply and installation of 20,000 mining machines purchased from Bitmain; it is expected to complete this installation by October this year. As of June 30, Argo had 1,953 bitcoins in its holdings.
Despite solid production, increasing exahash rate and expanded operational footprint, Argo’s share price has fallen since its IPO last fall. The stock began trading on September 23, ending its first day on the NASDAQ at $16.75; the stock is down 71% since then.
5-star analyst Darren Aftahi, of Roth Capital, has been covering Argo, and looking at the company’s recent performance, he sees plenty of reasons for long-term optimism. Aftahi writes, “Helios began mining in early May and should provide a modest boost to 2Q mining capacity and a larger impact in 2H22 as ARBK looks to reach its 5.5 EH/s final hash rate target… Overall we remain encouraged that Helios should begin to enable ARBK to increase its network share back towards 1% by the end of the year and do so with little dilution risk to shareholders.”
Based on these comments, Aftahi sets a Buy rating on ARBK shares – along with an $11 price target that indicates his confidence in a robust 142% upside for the next 12 months. (To see Aftahi’s track record, click here)
Argo has attracted the curiosity and attention of 5 Wall Street analysts, who have combined to give the stock a unanimous strong buy consensus rating. ARBK is currently trading at $4.84 and has an average price target of $11.40; this gives the share a one-year upside potential of 135%. (See ARBK stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the analysts referred to. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making an investment.