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These 2 Crypto Stocks Are Down Over 15% This Year – Have They Become Bargain Buys?
Bitcoin (CRYPTO:BTC) has rallied 50% this year as enthusiasm in the cryptocurrency world remains high. But not all cryptocurrency investments have gone well. Shares of Digital marathon (NASDAQ: MARA) e Anti-riot blockchain (NASDAQ: RIOT) are down more than 15% in 2024.
After strong years in 2023, have these stocks simply run out of steam or do they represent potential bargains for cryptocurrency investors today?
1. Digital marathon
Last year was a great one for Bitcoin miner Marathon Digital. Its shares skyrocketed 587% thanks to the cryptocurrency’s rising valuation. As one of the largest Bitcoin miners in North America, its operations benefit significantly from higher prices.
This year has been a different story, as Marathon shares have fallen about 18% since January. This also comes as the company has acquired more mining sites and expanded its overall capacity, which would increase its dominance and ability to generate significant revenue growth in the future.
In 2023, the company’s revenue skyrocketed 229%, with revenue reaching $388 million. Net profit of $261.2 million was also impressive, as the company benefited from gains on its digital assets.
During the year, Marathon produced 12,852 bitcoins, compared to just 4,144 the previous year. Things have been extremely positive for the company as of late, and part of the reason for the stock’s decline this year may have to do with investors ringing the register and cashing in on incredible profits.
Marathon’s stock doesn’t look expensive, trading at 18 times its trailing earnings. But investors should not forget the volatility that comes with mining company operations. In 2022, it suffered a net loss of $694 million as impairment charges weighed on its profits.
Given the uncertainty around Marathon’s future earnings, I wouldn’t call the company’s stock cheap. But if you can accept the high risk that comes with investing in stocks and want exposure to Bitcoin, this can be a positive growth stock to possess.
2. Riot control platforms
Another cryptocurrency mining stock that has struggled this year is Riot Platforms. Down about 25%, it performed even worse than Marathon. The stock also performed well in 2023, realizing gains of 356% for its shareholders.
The company had a strong year in 2023, achieving record revenue of $280.7 million, up 8% from the $259.2 million reported a year earlier. Riot Platforms says it has benefited from increased Bitcoin production and higher prices. During the year it produced 6,626 bitcoins, compared to 5,554 the previous year, an increase of 19%.
The story continues
Riot Platforms is a smaller mining company and more vulnerable to the effects of the Bitcoin halving (where rewards for mining Bitcoin will be halved). It’s also not generating as much growth as Marathon, so investors may be less optimistic about its future and current valuation.
The company did not make a profit last year despite the high price of Bitcoin, and this could be a cause for concern for investors. While its net loss narrowed to $49.5 million (compared to $509.6 million a year earlier, when impairment charges played a significant role), the lack of profitability is likely a concern for investors, given Bitcoin’s current high valuation. It doesn’t bode well for the company if Riot isn’t profitable at these cryptocurrency prices — and Bitcoin’s halving set for next month will potentially make it harder to stay out of the red.
Despite this year’s disappointing performance, Riot Platforms stock isn’t necessarily a cheap investment to add to your portfolio. Given the company’s lack of profitability, it may be best to avoid the stock altogether.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.
These 2 Crypto Stocks Are Down Over 15% This Year – Have They Become Bargain Buys? was originally published by The Motley Fool