The price of bitcoin (BTC/USD) has plunged over the last few days and the selloff intensified Wednesday. Bitcoin’s extreme volatility, namely a correction of more than $20,000 from its highs, has some wondering if there are safer ways to gain exposure to the digital currency.
Investors with a long-term timeframe may want to take a look at two public companies that offer indirect exposure to Bitcoin. Riot Blockchain Inc (NASDAQ:RIOT) and Marathon Digital Holdings Inc (NASDAQ:MARA) are some of the most popular bitcoin mining stocks in the crypto market and are trading far removed from their all-time highs.
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Should investors buy Riot Blockchain stock or Marathon Digital stock, or both? Let’s take a look at both names to evaluate an investment thesis.
Fundamental analysis: Riot Blockchain is a profitable company
Based in Colorado, RIOT is a bitcoin mining stock that is building an industrial-scale mining operation. The mode of operation is to increase the bitcoin mining hash rate while at the same time reducing energy costs. The company’s top line grew by more than 880% for the quarter ending March 31, 2021, to $23.2 million. This compares to $2.4 million reported in the same period a year ago. Net income came in at $0.09 per share compared to a net loss of $0.15 per share in 2020. The mining revenue margin also improved to 67.5% up from 40.4% last year.
RIOT technical analysis: trending support holding firm
Technically, Riot stock appears to be trading in a descending wedge formation in the 60-min chart. The descending trendline support line continues to hold firm and has recently triggered a rebound at around $22 per share.
This movement now creates bullish price targets at $29.56 and $36.21. Long-term price targets can be placed at around $44.30 once the price breaks above the wedge formation. The key support at $17.13 will be a good place to place the stop-loss limit.
Marathon Digital has an exciting growth story
Like Riot Blockchain, Marathon Digital is another bitcoin mining stock that focuses its operations on the US market. It also seeks to achieve its expansion goals at the lowest energy costs possible. The company posted year-over-year quarterly revenue growth of more than 1,444% to $9.2 million in the most recent quarter. Its earnings per share of $0.87 was a significant improvement from the net loss of $ 0.12 per share posted the same period a year ago. When we factor in expected earnings growth for the next five years, Marathon Digital trades at a compelling PEG ratio of just 0.30, which leaves a lot of room for the price to run.
Technical analysis: MARA stock has bottomed
Technically, shares of Marathon Digital appear to have bottomed at around $19.50 and buyers stepped in to bid shares higher to the $20.50 level. Assuming the price of Bitcoin stabilizes, investors can target short-term profits at the key resistance level at $27.37 or higher at $36.00 per share.
But since MARA stock is correlated with the price of Bitcoin, the key support level to watch is $16.49 and this a good area to place a stop loss limit.
Shares of Marathon Digital are trading several levels below the 100-hour and the 200-hour simple moving average lines, this leaves a lot of room to run going into the tail-end of the week.
Conclusion: pick MARA stock over Riot
Bitcoin is not a stranger to sudden price swings. It has often recovered to extend gains to new highs. Therefore, it may not be long before we see another recovery. This could result in a significant gain in the prices of the affected bitcoin stocks.
Both stocks look exciting ahead of a potential rebound but if investors wanted to pick just one of the Bitcoin stocks the choice seems clear. Marathon Digital’s long-term growth prospects give it the edge over Riot stock. Both companies are of about the same size and target the same market.