Subject: Bitcoin Blasts Above $20,000, Pulling These Cryptocurrency Stocks Higher Wed Dec 16, 2020 7:48 pm
All of these stocks are spiking today with bitcoin, but not all are equally positioned to capture the value bitcoin is creating long term.
What happened
The price of bitcoin blasted past $20,000 for the first time ever on Wednesday, and it has continued climbing. As of 12:30 p.m. EST, bitcoin was around $20,600.
Bitcoin's 7% move was reflected in surges for other cryptocurrencies. For example, Ether (the native token for the Ethereum blockchain) is up 6% over the past 24 hours, according to CoinDesk. Likewise, Ripple is up 9% over the last 24 hours.
Grayscale Bitcoin Trust (OTC:GBTC) stock was up 10%.
How does the price of bitcoin affect these companies? And what do these big moves mean for investors?
So what
These companies all benefit from the rising price of bitcoin in different ways. Some companies hold bitcoin. Others mine bitcoin -- which is the process of unlocking a new supply of bitcoin tokens. And some sell hardware so other companies can mine bitcoin. Obviously, these businesses all have very different value propositions.
Companies that hold bitcoin are the best candidates to rise and fall with bitcoin's price. For example, MicroStrategy has cash on hand for working capital, but everything else is held in bitcoin reserves. As of Dec. 4, the company held 40,824 bitcoins. Its average price per bitcoin is around $11,600, so it's already seen an almost 80% return.
This quick appreciation is motivating MicroStrategy to buy more. In fact, it just issued $635 million in convertible notes for the express purpose of buying more bitcoin.
Another company that should move with bitcoin is Grayscale Bitcoin Trust. Even though it trades over the counter (OTC), it calls itself the first public exchange traded fund (ETF) for cryptocurrency that reports to the Securities and Exchange Commission (SEC). As a bitcoin ETF, it holds bitcoin, logically meaning its price goes up and down with the cryptocurrency.
Moving to mining, Marathon Patent Group generates revenue directly from mining operations. Similarly, 99% of Riot Blockchain's revenue comes from mining.
Mining cryptocurrencies is expensive; the companies have to invest in facilities, computing power, and electricity for running computers and air conditioning to keep equipment from overheating. Bitcoin prices haven't kept up with mining costs in recent years, meaning both Marathon and Riot Blockchain have recorded massive operating losses in 2020 -- $4.9 million and $18.5 million, respectively.
Subject: Bitcoin Blasts Above $20,000, Pulling These Cryptocurrency Stocks Higher 
Wed Dec 16, 2020 7:48 pm
