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Volatility as Opportunity in the Crypto Space (ISWH, COIN, RIOT, HVBTF, MARA, GBTC)

Experienced crypto investors have a saying: HODL. It is a play on the spelling of the word “Hold” but also an abbreviation for “Hold On for Dear Life”, which is a sentiment that characterizes the attitude of anyone capable of making the fortunes on offer in the crypto space. If you can’t stomach some ups and downs, you’re unlikely to end up with the pot of gold.

Volatility is part of the game because these are new frontiers of finance. While the digital currency revolution is extremely promising over the long term, anything that is new and unfamiliar to most market participants is bound to experience sudden and dramatic upheavals of doubt and uncertainty.

One such moment happened in late 2018 when Bitcoin fell by 50% in about 3 weeks. For those who sold in December at those low levels, it’s hard to imagine the psychological torture of seeing it 2,000% higher just two years later. And for those who bought into some of the stocks in the space during that same period, it’s hard not to imagine their joy.

Now, after a monumental run, we have another test of faith for the long-term HODLers, as BTC repeatedly tests the broad zone around $30k. The corrective move that started in April, but hit its stride in mid-May, has offered up some big discounts not only in coins but also in key stocks in the crypto space, and it’s likely to be another important opportunity for either regret or joy for some future set of imagined market participants.

This has big implications for stocks such as Riot Blockchain Inc (NASDAQ: RIOT), Coinbase Global Inc (NASDAQ: COIN), ISW Holdings (OTC US: ISWH), Marathon Patent Group Inc (NASDAQ: MARA), HIVE Blockchain Technologies Ltd (OTC US: HVBTF), and Grayscale Bitcoin Trust (OTC US: GBTC).

We take a closer look at a few of them here.

 

Riot Blockchain Inc (NASDAQ: RIOT) has become one of the most recognizable stocks in the crypto space, but shares have been sliding sharply of late. The company is expanding and upgrading its mining operations by securing the most energy-efficient miners currently available. The company also holds certain non-controlling investments in blockchain technology companies.

Riot is headquartered in Castle Rock, Colorado, and the company’s mining facility operates out of upstate New York, under a co-location hosting agreement with Coinmint.

Riot Blockchain Inc (NASDAQ: RIOT) recently announced its May production and operational updates, including its unaudited Bitcoin production for May 2021 and its latest miner delivery status.

In May 2021, Riot produced 227 BTC, an increase of approximately 220% over its May 2020 production of 71 BTC. Year to date through May 2021, the Company produced a total of 924 BTC, an increase of approximately 101% over its pre-halving BTC production during the same 2020 period of 460 BTC. As of May 31, 2021, Riot held approximately 2,000 BTC, all of which were produced by its mining operations.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action RIOT shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -11% on above-average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Shares of the stock have powered higher over the past month, rallying roughly 38% in that time on strong overall action.

Riot Blockchain Inc (NASDAQ: RIOT) pulled in sales of $23.2M in its last reported quarterly financials, representing top line growth of 872.2%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($275.6M against $7.4M).

 

ISW Holdings (OTCMKTS: ISWH) ramped up its crypto operations last summer with its partnership with Bit5ive LLC, designing and assembling its POD5 mining pod, which is a fully self-contained high-PUE mining solution designed, assembled, and installed in partnership with Bit5ive at the Bit5ive 100 MW renewable energy cryptocurrency mining facility in Pennsylvania.

It has since tripled its fleet of mining pods. Each pod is powered by 280 mining rigs and is capable of driving roughly $2.9 million in annualized revenues (at current cryptocurrency price levels). ISW Holdings continues to build out its own mining capacity, with plans to bring multiple additional pods online this year. However, data from pod mining operations is also being collected for the purpose of marketing the POD5IVE datacenter to other businesses and individuals interested in a self-contained industry-leading cryptocurrency mining solution.

ISW Holdings (OTCMKTS: ISWH) put out a fresh update this morning that included hash rate data and revenue projections as well as some insights into its upcoming opportunity at the huge Mining Disrupt Expo and Conference in Miami on July 20-21, where both ISWH and Bit5ive will be key participants.

“ISW Holdings operates as a diversified holdings company with a current market cap of approximately $25 million driven largely by the Company’s growing expertise in acquiring, launching, hosting, and operating assets in the cryptocurrency and telehealth sectors,” noted ISW Holdings President and Chairman, Alonzo Pierce. “Our partnership with Bit5ive has provided us with state-of-the-art POD5 infrastructure and the ability to develop efficient and expandable mining operations. And we look forward to further expansion and optimization in this domain over coming months.”

Bit5ive is North America’s largest provider of collective management services and mining equipment along with ISWH with a turnkey solution on delivering cost-efficient and reliable hosting, distribution of mining equipment, complete facility management, and mining pool operations in projects to be announced.

Pierce added, “We continue to make huge progress, recently increasing our hash rate to 72,000 Th/s, driving an expected $484,000 in monthly revenue – or over $5.8 million annually – through the Bitmain Antminer s17 fleet we already have online and working. As we continue to maximize our hash rate, we should see a reduction in proportional direct costs associated with mining operations. Naturally, we continue to lean on Robert and Bit5ive for expertise and support in translating our investment in this process into growing value.”

ISW Holdings (OTCMKTS: ISWH) has reduced outstanding shares by nearly 25% and eliminated over $3.4 million (or 94%) of outstanding convertible debt in recent months. ISWH has also shown topline and bottom-line growth over recent quarters from its Telehealth and Home Healthcare division.

 

Marathon Patent Group Inc (NASDAQ :MARA) currently operates as one of the largest enterprise Bitcoin self-mining companies in North America

It bills itself as a digital asset technology company that mines cryptocurrencies with a focus on the blockchain ecosystem and the generation of digital assets.

Marathon Patent Group Inc (NASDAQ: MARA) recently announced that it is set to join the Russell 2000® Index at the conclusion of the 2021 Russell indices’ annual reconstitution, effective after the U.S. stock markets open on June 28, 2021. The stock will also be automatically added to the appropriate growth and value indexes.

“Being added to the Russell 2000® Index demonstrates the immense progress we have made transforming Marathon over the past year,” said Fred Thiel, Marathon’s CEO. “We expect our inclusion in the index to increase our visibility within the greater investment community, which will benefit both new and existing shareholders as we continue to build Marathon into one of the largest and most environmentally conscious Bitcoin miners in North America.”

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action MARA shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -7% on above-average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Shares of the stock have powered higher over the past month, rallying roughly 33% in that time on strong overall action.

Marathon Patent Group Inc (NASDAQ: MARA) managed to rope in revenues totaling $9.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 1444.8%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($504.5M against $2.9M).

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