10 Companies that Benefit From Crypto Mining
In this article, we discuss the 10 companies that benefit from crypto mining. If you want to skip our detailed analysis of these companies, go directly to the 5 Companies that Benefit From Crypto Mining.
Crypto mining operations have been hit in recent weeks as the prices of cryptocurrencies fall rapidly. Bitcoin, the most popular cryptocurrency, has slumped from a record high of $64,000 in April to around $30,000. Ethereum, the second most popular coin, has also fallen from an all-time high of $4,362 to below $2,000. Other alternative digital currencies and crypto-related stocks have been down in trading as well. Panicked selling has increased the chaos around crypto in recent weeks even as hedge fund sentiment around the technology improves.
The companies that were taking advantage of crypto mining to grow their business, like NVIDIA Corporation (NASDAQ: NVDA), Advanced Micro Devices, Inc. (NASDAQ: AMD), and Tesla, Inc. (NASDAQ: TSLA), have all seen share price fall over the past few days. NVIDIA Corporation (NASDAQ: NVDA) fell recently as Chinese crackdown against crypto mining intensified. Advanced Micro Devices, Inc. (NASDAQ: AMD) and Tesla, Inc. (NASDAQ: TSLA) have also registered similar slumps this week.
However, even as cryptocurrencies fall in value, there is reason to hope that this is just a temporary setback for the new technology that has widely been hailed as the future of finance. Famous investors like Cathie Wood, Stanley Druckenmiller, Ray Dalio are bullish on the future of crypto. All three run multi-billion dollar hedge funds with an unblemished record. Wood controls ARK Investment Management, Dalio runs Bridgewater Associates, and Druckenmiller is the chief of Duquesne Capital.
In addition to hedge fund sentiment, another positive that investors can take back home as crypto stocks get battered is the opinion of industry leaders on the future of blockchain technology. Influential names such as Balaji Srinivasan, Jack Dorsey, and Elon Musk have all backed crypto to bounce back from the current dip. Musk, who has a cult-like following on social media, is bullish on the crypto future despite recent statements around energy-intensive crypto mining methods and their impact on the environment.
It is still unclear how crypto-related stocks will deal with the slump around blockchain that might last longer than expected. However, even as cryptocurrencies fall, it is evident they have initiated a revolution in finance that is going to be hard to stop. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Image by Лечение Наркомании from Pixabay
With this context in mind, here is our list of the 10 companies that benefit from crypto mining. These were ranked keeping in mind the overall returns offered to investors over the past year, the relationship with cryptocurrencies, and the earnings philosophy at the core of each business.
Companies That Benefit From Crypto Mining
10. Honeywell International Inc. (NASDAQ: HON)
Number of Hedge Fund Holders: 56
Honeywell International Inc. (NASDAQ: HON) is a multinational company with interests in aerospace, technology, and manufacturing. The company has over the past few years started using blockchain technology to track airplane parts and maintain aircraft records. The platform used by the firm for this purpose, GoDirect is now used by over 7,000 users. The company is ranked tenth on our list of 10 companies that benefit from crypto mining. The stock has returned 49% to investors over the past year.
On June 8, Honeywell International Inc. (NASDAQ: HON) CEO Darius Adamczyk told news platform CNBC that the firm was exploring all options for a newly formed quantum computing unit at the business which had been split into a seperate company earlier in the day.
At the end of the first quarter of 2021, 56 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Honeywell International Inc. (NASDAQ: HON), up from 45 the preceding quarter worth $983 million.
Just like NVIDIA Corporation (NASDAQ: NVDA), Advanced Micro Devices, Inc. (NASDAQ: AMD), and Tesla, Inc. (NASDAQ: TSLA), Honeywell International Inc. (NASDAQ: HON) is one of the companies that benefit from crypto mining.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Honeywell International Inc. (NASDAQ: HON) was one of them. Here is what the fund said:
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included industrials, Honeywell also lagged in the quarter after previously generating strong returns over extended periods.”
9. ZK International Group Co., Ltd. (NASDAQ: ZKIN)
Number of Hedge Fund Holders: 3
ZK International Group Co., Ltd. (NASDAQ: ZKIN) is a Chinese company that makes pipes and other fittings. Recently, a blockchain research and development arm of the firm announced that it would be launching its own crypto trading platform named xSigma Trading. A website with the same name is now open for access. The firm is placed ninth on our list of 10 companies that benefit from crypto mining. The company’s shares have returned 188% to investors over the past year.
On June 21, ZK International Group Co., Ltd. (NASDAQ: ZKIN) CEO Jiancong Huang said that the company was planning to expand and would increase presence in Europe and step into markets like the United States as a construction boom drives demand worldwide.
At the end of the first quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $1.03 million in ZK International Group Co., Ltd. (NASDAQ: ZKIN), up from 1 the preceding quarter worth $1.07 million.
Just like NVIDIA Corporation (NASDAQ: NVDA), Advanced Micro Devices, Inc. (NASDAQ: AMD), and Tesla, Inc. (NASDAQ: TSLA), ZK International Group Co., Ltd. (NASDAQ: ZKIN) is one of the companies that benefit from crypto mining.
8. MicroStrategy Incorporated (NASDAQ: MSTR)
Number of Hedge Fund Holders: 20
MicroStrategy Incorporated (NASDAQ: MSTR) is a software company providing business intelligence and other cloud-based services. It is ranked eighth on our list of 10 companies that benefit from crypto mining. The stock has offered investors returns exceeding 370% over the course of the past twelve months. Amid a lull in the prices of crypto offerings, the company has doubled down on purchase of Bitcoin and has become one of the biggest backers of the new technology in the corporate world.
On June 21, MicroStrategy Incorporated (NASDAQ: MSTR) announced that it had purchased 13,000 bitcoins worth close to $500 million from the proceeds of a bond sale. The company now has a total of 105,085 bitcoins worth over $2.7 billion.
At the end of the first quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $132 million in MicroStrategy Incorporated (NASDAQ: MSTR), up from 15 in the previous quarter worth $134 million.
Just like NVIDIA Corporation (NASDAQ: NVDA), Advanced Micro Devices, Inc. (NASDAQ: AMD), and Tesla, Inc. (NASDAQ: TSLA), MicroStrategy Incorporated (NASDAQ: MSTR) is one of the companies that benefit from crypto mining.
In its Q1 2021 investor letter, Alger, an asset management firm, highlighted a few stocks and MicroStrategy Incorporated (NASDAQ: MSTR) was one of them. Here is what the fund said:
“MicroStrategy Incorporated was among the top contributors to performance. MicroStrategy is a global leader in enterprise analytics software and services. MicroStrategy’s core software platform provides customers with visualization and reporting capabilities, mobility features and custom applications to help with complex business questions. Today, MicroStrategy has over 4,000 customers worldwide. In August 2020, MicroStrategy decided to make bitcoin its preferred reserve currency. To date, MicroStrategy has purchased over 90,000 bitcoins at an aggregate purchase price of $2.17 bi11 ion and an average price of over $23,985 per bitcoin. Going forward, MicroStrategy plans to use excess cash generated by its core business to purchase additional bitcoin.
Shares of MicroStrategy outperformed in the first quarter due to the appreciation of the company’s bitcoin asset, as the price of
bitcoin relative to the U.S. dollar rose materially in the quarter. This bitcoin appreciation was driven by concerns about U.S. dollar inflation as well as other public companies deciding to acquire bitcoin to diversify reserve assets. MicroStrategy is establishing itself as a thought leader in the bitcoin space, and the company hosted an event at its February user conference to help other organizations understand the benefits of bitcoin as a reserve asset. MicroStrategy’s core software business is also benefitting from its status as a leader in the bitcoin space, with the increased public attention aiding MicroStrategy’s recruitment and marketing efforts as the software business continues to transition to a cloud-based subscription model.”
7. Silvergate Capital Corporation (NYSE: SI)
Number of Hedge Fund Holders: 28
Silvergate Capital Corporation (NYSE: SI) is the holding company which owns the Silvergate Bank. It was one of the first banks to launch a trading network to convert cryptocurrencies into US dollars. The network, named Silvergate Exchange Network, now has more than 1,100 users, including coin exchanges such as Binance. The holding firm is placed seventh on our list of 10 companies that benefit from crypto mining. The company’s shares have offered investors returns exceeding 546% over the course of the past year.
On May 19, investment advisory Wedbush added Silvergate Capital Corporation (NYSE: SI) to its Best Ideas List after noting that a new Silvergate deal with Diem stablecoin could lead to a revenue in the hundreds of millions for the bank.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in Silvergate Capital Corporation (NYSE: SI) with 1.9 million shares worth more than $275 million.
Just like NVIDIA Corporation (NASDAQ: NVDA), Advanced Micro Devices, Inc. (NASDAQ: AMD), and Tesla, Inc. (NASDAQ: TSLA), Silvergate Capital Corporation (NYSE: SI) is one of the companies that benefit from crypto mining.
6. International Business Machines Corporation (NYSE: IBM)
Number of Hedge Fund Holders: 41
International Business Machines Corporation (NYSE: IBM) is a technology company with interests in computer software, cloud services, and information technology businesses. It is ranked sixth on our list of 10 companies that benefit from crypto mining. The stock has returned 22% to investors in the past twelve months. The company has a separate cloud-based service for blockchain developers and stands to benefit from an increase in mining of crypto coins as it would boost this service.
On June 4, International Business Machines Corporation (NYSE: IBM) announced that it had signed a deal worth £210 million with the Hartree Centre in the United Kingdom for the establishment of a digital innovation unit that would conduct research into application of new technologies for solving industrial challenges.
Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in International Business Machines Corporation (NYSE: IBM) with 3.6 million shares worth more than $482 million.
Just like NVIDIA Corporation (NASDAQ: NVDA), Advanced Micro Devices, Inc. (NASDAQ: AMD), and Tesla, Inc. (NASDAQ: TSLA), International Business Machines Corporation (NYSE: IBM) is one of the companies that benefit from crypto mining.
In its Q2 2020 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and International Business Machines Corporation (NYSE: IBM) was one of them. Here is what the fund said:
“AT&T and IBM exited the portfolio as they no longer met the quality criteria for inclusion with AT&T exceeding the debt limit and IBM falling out due to deteriorating long-term fundamental stability.”
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Disclose. None. 10 Companies that Benefit From Crypto Mining is originally published on Insider Monkey.
