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One Overlooked Cryptocurrency Investing Opportunity

Crypto investors should take a closer look at Bitcoin miners, a panel of experts convened by TheStreet advised.
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TheStreet recently assembled an all-star panel of experts to discuss digital transformation, investing strategies, and opportunities. And they identified cryptocurrency miners as a strong opportunity and a good way to get involved with investing in the cryptocurrency space.

Although the digital currency landscape is volatile and constantly changing, there are signs that positive momentum for cryptocurrencies can continue as fintech grows, the numbers of miners increases, and more multi-billion dollar firms put their names and reputations on the line as they get behind Bitcoin, Ethereum and other cryptocurrencies.

TheStreet's panel included managing director and head of ETF products at VanEck  (OUNZ) - Get VanEck Merk Gold Trust Report Ed Lopez, CEO of New Constructs David Trainer, CFA and product manager at VanEck John Patrick Lee and research analyst for Jim Cramer's Action Alerts Plus Charitable Trust Zev Fima.

"I'll keep it in the ecosystem and work a level down. I really find the miners and their business model particularly interesting. They have been successful at arbitrating stranded carbon and partnering with energy companies to find renewable energy sources of energy and lower-cost sources of energy because that's such a big part of their business," said Lopez.

"I think the miners are a flexible partner for energy companies, being able to go in and pick up extra slack on the power grid or extra energy that is developed. They're mobile. They can move around the world to find the lowest-cost energy inputs. And, you know, given the growth and the trend that we're seeing in the ecosystem and the adoption of cryptocurrency, I find miners a really interesting and attractive story," Lopez added. 

In a recent meeting hosted by MicroStrategy  (MSTR) - Get MicroStrategy Incorporated Report CEO Michael Saylor, Tesla's  (TSLA) - Get Tesla Inc. Report Elon Musk called upon large Bitcoin miners to be more transparent about their energy usage. Musk revealed the meeting in a tweet, saying he had spoken with North American Bitcoin miners and asked them to publish reports on renewable usage and ask other mining companies to do the same. 

The meeting resulted in the group forming the Bitcoin Mining Council to work towards a cleaner and more transparent way of mining Bitcoin in the future, according to TheStreet's Luke Conway.

Saylor added that the Council would help to "standardize energy reporting, pursue ESG goals, & educate+grow the marketplace."

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Some companies like Nvidia  (NVDA) - Get NVIDIA Corporation Report have noted a degree of uncertainty in predicting the impact of cryptocurrency mining on near-term sales.

"It's hard to estimate exactly how much and where crypto mining is being done. However, we can only assume that the vast majority of it is contributed by professional miners, especially when the amount of mining increases tremendously like it has," CEO Jensen Huang told investors on a conference call this past week. 

TheStreet's Jim Cramer noted in his daily Action Alerts Plus rundown this past week that while Nvidia has performed well and its recent 4-for-1 stock split makes sense, the link between cryptocurrency mining and Nvidia’s performance is not necessarily that strong.

“I think that people just genuinely like to buy tech when crypto's doing well,” Cramer said

Daniel Roberts, Editor-in-Chief of crypto news site Decrypt, explained in a recent interview with TheStreet why Bitcoin mining uses so much electricity. "Nvidia and other companies were like: 'we don't like that our rigs and our chips are being used for crypto mining,' but I think that's changed a little bit," he said. 

"Bitcoin mining uses these expensive chips called ASIC and those are the reason why Bitcoin uses so much electricity. When Ethereum makes the shift to eIF2, which will use proof of stake, it won't need those ASIC chips. And that's why it won't use nearly as much electricity. I don't know what that means for companies like AMD  (AMD) - Get Advanced Micro Devices Inc. Report and Nvidia in terms of whether they'll want to be involved in crypto mining in any way, shape, or form. But, that's where things are headed in the mining space," Roberts added. 

Watch the full webinar sponsored by VanEck to hear more insight about the digital transformation: