Why Did These Bitcoin Miners Skyrocket Today?

Why Did These Bitcoin Miners Skyrocket Today?

With share prices still depressed this year, we look at why these bitcoin miners saw their share prices explode in pre-market trading.

Riot Blockchain, Inc. (NASDAQ: RIOT) and Marathon Digital Holdings, Inc. (NASDAQ: MARA) saw increases of 11.85% and 21.39% respectively, in their share prices in pre-market trading today. This comes on the back of positive news for the cryptocurrency market, which has become rare this year. So, why are these bitcoin miners up today?

Why were Riot Blockchain and Marathon up today?

Bitcoin has rallied 6.38% over the past five days due to a small revival in investor optimism over the economy and central bank monetary tightening. However, it fell by 2.57% on Monday as analysts predict a minimum 0.75% rate increase during the Fed’s meeting on July 26-27. The share price of Bitcoin miners tends to mirror the price of Bitcoin itself as this is the asset they rely on for income.

Marathon Digital Holdings, the largest crypto miner, saw its share price increase higher than Riot Blockchains due to the Bitcoin rally and news that it announced a new hosting contract with Applied Blockchain, Inc. (NASDAQ: APLD). Fred Thiel, Marathon’s chairman, and CEO said the five-year contract for 200 megawatts of Bitcoin mining capacity will help it achieve its “target of 23.3 exahashes per second of compute power for Bitcoin mining in 2023.” This contract hosting agreement also supports Marathon’s asset-light strategy, which frees up resources to invest in scaling up the business more efficiently.

However, this good news may be short-lived. Many analysts believe Bitcoin and Ether could still plunge as the macroeconomic environment becomes more uncertain. These currencies have not yet proven themselves or even experienced such environments before. What was once touted as the greatest hedge against inflation has essentially collapsed as inflation rates rise. This has resulted in a so-called ‘Crypto Winter’ which has seen several bankruptcies and asset freezes in the space.

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