Banned from Bitcoin Posts, WallStreetBets Turns to Crypto Miners

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Bitcoin’s retail investor-driven surge has nothing on its miners and trading firms.

Just look at WallStreetBets, the freewheeling forum favored by amateur traders whose touts led to a frenzy in videogame retailer GameStop Corp.’s stock.

Reddit message board WallStreetBets has a “No Cryptocurrency” rule, which forbids posts devoted solely to digital tokens like Bitcoin and their underlying technology — there are offshoots like SatoshiStreetBets for that. But it’s littered with references to cryptocurrency miners. Posts and comments abound on RIOT, the ticker of Riot Blockchain Inc., and MARA, or Marathon Digital Holdings Inc. — two Bitcoin mining stocks whose rise of more than 7,600% in the past year as of March 12 has surpassed Bitcoin’s 10-fold surge.

“Oh, we can talk about RIOT now? Nice, I guess I can show this 16-bagger,” one user said using the investing forum’s language in a February post to brag about a 16-fold return on their investment.

Reddit didn’t create the mania for miners and cryptocurrency brokerage shares which have ridden the rally in Bitcoin in the past year, but inclusion of those names in the message board does reflect the allure of big crypto stock winners when Bitcoin is booming.

Crypto-linked stocks previously surged during the Bitcoin bubble in 2017, although at the time businesses like former iced-tea company Long Blockchain Corp. had little to do with Bitcoin and blockchain technology other than references in their names.

These days, there are a multitude of listed crypto firms with legitimate ties to the industry. Canadian broker Voyager Digital Ltd., up some 8,900% in the last 12 months through March 12, is another stock that has captured investors’ imagination as Bitcoin returned to the fore.

Meanwhile, digital currency trading platform Coinbase Global Inc.’s upcoming Nasdaq listing shows there’s still more to come for the space. It was said to be valued at roughly $90 billion in a private auction.

It’s a craze that analysts say could backfire: Bitcoin is volatile enough — buying stocks that are once-removed from the digital asset run an even bigger risk.

“Investors should consider whether the business model is sustainable in an environment where Bitcoin prices aren’t quadrupling year over year,” said Howard Wang, co-founder of New York-based investment advisory and market research firm Convoy Investments.

“Bitcoin and miners are fundamentally different investments,” Wang added, noting that returns “are related but will often diverge.”

Layers of Risk

Investors in Bitcoin largely need to worry only about price swings, alongside security, storage and other fees. Investing in a company also adds additional layers to consider, including the quality of the business and management, and wider market forces.

“It’s quite hard to do better than just holding Bitcoin itself, frankly,” said Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore. “Owning an asset versus the business that produces that asset are quite different both from a cost and opportunity perspective.”

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