The share price performance of Bitcoin mining companies is closely tied to Bitcoin prices. So, investors looking to gain exposure to Bitcoin (BTCUSD) can consider buying shares of companies that mine the digital asset.
While BTC prices have surged over 40% year-to-date, many crypto mining companies have trailed the broader markets in 2024. One major reason is the “halving” event that took place in April 2024. The Bitcoin halving occurs every four years, after which the mining rewards are reduced by 50%. This suggests that the amount of Bitcoin that miners receive is cut in half, driving share prices lower - at least, until Bitcoin prices rise again.
But the pullback offers an opportunity to buy the dip and benefit from outsized gains once market sentiment improves. Here, we compare two quality mining stocks, CleanSpark (CLSK) and Riot Platforms (RIOT), to see which stock is a better buy right now.
Is CleanSpark Stock a Good Buy Right Now?
Unlike other crypto mining stocks, CleanSpark (CLSK) has returned 40.6% to shareholders in 2024, and is up 262% in the last 12 months. Valued at $3.5 billion by market cap, CleanSpark owns and operates data centers that run on low-carbon power. It recently announced an agreement to acquire two bitcoin mining locations in Wyoming with 75 MW of available power for $18.75 million. Once fully operational, the deal should add more than four exahashes per second (EH/s).
The hash rate is measured by the total number of hashes on a particular decentralized network. A higher hash rate should help CleanSpark solve computational puzzles quickly and mine BTC faster.
In fiscal Q2 of 2024 (ended in March), CleanSpark increased its operational capacity by 60% with new facilities in Mississippi and Georgia, enhancing its capacity to more than 17 EH/s. This increase in capacity expansion has translated to revenue and profitability growth for the company.
In the March quarter, CleanSpark increased revenue by 163% to $122 million, and reported a net income of $126.7 million, or $0.59 per share, compared to a loss of $18.5 million, or $0.23 per share in the year-ago period. It ended Q2 with $323 million in cash and $358 million worth of Bitcoin.
CLSK stock is forecast to increase adjusted earnings from $0.48 per share in fiscal 2024 to $1.31 in 2025. So, priced at 11 times forward earnings, the mining stock is quite cheap.
Out of the six analysts covering CLSK stock, five recommend “strong buy” and one recommends “hold.”
The average target price for CLSK stock is $20.70, indicating an upside potential of 33.3% from current prices.
What's the Target Price for Riot Platforms Stock?
Down 40% in 2024, Riot Platforms (RIOT) reported net income of $211.8 million and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $245.7 million in Q1 of 2024, both record highs for the company. Comparatively, mining costs totaled $41.1 million, up 88% year over year, while operating expenses more than quadrupled to $57.7 million in Q1.
Like CleanSpark, Riot Platforms is investing heavily to expand its mining capacity. Its hash rate should touch 31 exahashes per second by the end of 2024, almost tripling its current capacity, making Riot the largest BTC mining facility in the world.
Out of the 11 analysts covering RIOT stock, 10 recommend “strong buy,” and one recommends “moderate buy.”
The average target price for RIOT stock is $17.10, indicating an upside potential of 80.1% from current prices.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
