HomeMarket News Stocks to Consider Shedding Post Bitcoin Halving

Stocks to Consider Shedding Post Bitcoin Halving

Actionable Trade Ideas

always free

Exploring market contenders set to face tremors following the Bitcoin halving

MicroStrategy: A Bumpy Ride Ahead

A chart of the MicroStrategy (MSTR) logo with a Bitcoin

Source: JOCA_PH / Shutterstock.com

MicroStrategy (NASDAQ:MSTR) embodies the struggle ahead for companies positioning themselves in the cryptocurrency sphere as the Bitcoin halving approaches. The companyโ€™s aggressive acquisition of Bitcoin, funded through debt, may soon come back to haunt them post-halving.

Investor sentiment took a turn following MicroStrategyโ€™s unveiling of a $500 million convertible note offering in March. The subsequent 7% stock price plummet indicates a weariness among investors towards loading up on digital assets through debt.

Despite the founder Michael Saylorโ€™s unwavering faith in Bitcoinโ€™s supremacy over gold, concerns about MicroStrategyโ€™s overreliance on the cryptocurrency persist. Short seller Kerrisdale Capital underscores the skepticism, attributing the companyโ€™s inflated stock valuation to the overly optimistic pricing of Bitcoin, setting the stage for a potential tumble post-halving.

Kerrisdale suggests a valuation for MSTR stock ranging between $700 and $800 per share, significantly below its current trading value.

Argo Blockchain: Facing a Storm

Fluctuations and forecasting of exchange rates of virtual money bitcoin (BTC-USD). Red and green arrows with golden Bitcoin ladder on paper forex chart background. Cryptocurrency concept.

Source: jantsarik /Shutterstock.com

Argo Blockchain (NASDAQ:ARBK) faces an uphill battle leading up to the looming Bitcoin halving, with a slump in mining efficiency exacerbating their woes.

The revelation of a 20% drop in daily Bitcoin output in January resulted in a substantial dip in mining income of 19% to $5.3 million. Factors contributing to this decline include a 16% hash price decrease for Bitcoin and weather-related delays.

With mounting network difficulty and dwindling transaction fees within the Bitcoin network painting a grim picture, Argo Blockchainโ€™s post-halving prospects appear bleak. The issue of shareholder dilution compounds the companyโ€™s challenges, indicating rough seas ahead for ARBK investors.

Iris Energy: Navigating Choppy Waters

The Rise and Fall of Iris Energy: A Rollercoaster Ride for Investors

A Slip in Bitcoin Mining for IREN

Comparing the 341 bitcoins mined in January to the 310 bitcoins in February, Iris Energy (NASDAQ: IREN) faced a slight downturn. Throughout February, the operational hash rate remained at 7 exahashes per second (EH/s).

Revenue Resurgence Amidst Challenges

In a surprising turn of events, despite the decrease in mined bitcoins, mining income soared from $14.5 million in January to $15.2 million in the current month. The rise was fueled by a higher average hash rate of 6.3 EH/s coupled with the surge in Bitcoin price to $49.1k. These combined factors contributed to an increase in the overall value of the output, highlighting the resilience of Iris Energy in challenging market conditions.

Share Issuance Woes

Iris Energyโ€™s questionable strategy of using share issuances to drive growth became evident as the latest report indicated a significant rise from 11.1 million outstanding shares in June 2019 to 84.4 million shares presently. This stark increase, a staggering 660%, has raised concerns among investors regarding shareholder dilution and its impact on the companyโ€™s prospects.

The Absence of Bitcoin Holdings

Another crucial point working against Iris Energy is the lack of significant Bitcoin holdings in its portfolio, unlike its competitors like Riot Blockchain (NASDAQ: RIOT), Marathon Digital Holdings (NASDAQ: MARA), and CleanSpark (NASDAQ: CLSK). These companies have strategically accumulated substantial amounts of Bitcoin alongside their mining activities, positioning them favorably in the event of a halving, which is anticipated to lead to a surge in Bitcoin prices.

Looking to the Future

With the likelihood of a halving event on the horizon, companies like RIOT, MARA, and CLSK appear poised to capitalize on the market dynamics compared to Iris Energy. Investors may find these competitors more attractive due to their robust Bitcoin holdings and the potential for greater returns in the evolving cryptocurrency landscape.

Disclaimer: On the publication date, Faizan Farooque did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and various other financial websites. With years of experience analyzing the stock market and a background as a former data journalist at S&P Global Market Intelligence, Faizan aims to empower the average investor with insights to make better-informed decisions regarding their investment portfolio.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.