Bitcoin’s sharp 2022 decrease is causing collateral damage in other areas of the financial markets, particularly among stocks that are crypto-correlated.
Naturally, the topic of bitcoin miners comes up, and some of those names are seeing greater year-to-date reductions than the cryptocurrency itself. That is proof that investors seeking value in this market must be picky. Investors can achieve that goal by using exchange-traded funds, one of which is the VanEck Digital Assets Mining ETF (DAM).
DAM, which made its debut in March, contains 24 equities and tracks the MVIS Global Digital Assets Mining Index. Among the crypto-correlated equities, certain of those names are appropriate to value prospects.
When compared to their 52-week highs, the stocks of companies that make money by mining bitcoin, ether, and other digital currencies have sometimes lost more than 80% on average. According to Valkyrie’s study, bitcoin and ether values appear to have declined by almost 65% within the same time frame.
According to the research firm, some bitcoin miners have cash on their balance sheets that exceed their crypto holdings. This attribute not only prevents losses as bitcoin prices fall but also suggests value.
Bitcoin miners like Hive Blockchain Technologies (NASDAQ: HIVE), Argo Blockchain (NASDAQ: ARBK), and Bitfarms are examples of those that have more cash than cryptocurrency holdings (NASDAQ: BITF). According to issuer statistics, Hive Blockchain ranks third among DAM’s holdings with a weight of 6.6%, followed by Argo and Bitfarms, which together account for over 8% of the DAM roster.
“Even if bitcoin’s price has dropped since the end of March, some businesses have more cash on hand than cryptocurrency holdings, which lessens the losses on their balance sheets. Although HIVE, ARBK, and BITF are now selling at trailing price-to-earnings ratios of under 3, 6, and 9, respectively, ahead earnings are probably going to be lower than trailing earnings, according to Valkyrie.
In fact, although some bitcoin miners have negative profitability that may limit their capacity to return, others are possibilities for share price bounces. In light of this, DAM could be the best strategy to utilize as it relieves investors of the stress of stock selection.
