ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Crypto Channel
  2. Despite Bitcoin Dip, Investors Can Profit on Miners
Crypto Channel
Share

Despite Bitcoin Dip, Investors Can Profit on Miners

Elle CarusoMay 09, 2022
2022-05-09

Bitcoin prices do not need to be sky-high for a mining company to be profitable — in fact, even at today’s levels, miners are still attractive buys. 

Bitcoin dropped below $33,000 on Monday, and has been steadily declining since last week’s broad market sell-off, in which the Dow Jones Industrial Average and Nasdaq Composite posted their worst single-day drops since 2020.

Many investors are viewing this as an ideal buying opportunity for digital assets, as the asset class is inherently volatile. Digital assets have seen years of tenfold growth and other years with more than 80% losses. In 2020, bitcoin returned nearly 303% — the following year, in 2021, it returned over 57%.

The Invesco Alerian Galaxy Crypto Economy ETF (SATO ) is an offering that includes exposure to miners. 

According to Rene Reyna, head of thematic & specialty product strategy at Invesco, oil drilling and oil rigs are a comparable business model to crypto miners; based on operational costs, oil needs to be traded at a certain price per barrel in order for the company to be profitable.

Similarly, in the bitcoin mining world, another capital-intensive business, a strong determinant is the timing of when an organization got into the space and how it is managing debt, Reyna said. The baseline figure for profitability, however, is a lot lower than what many investors expect.

“What we’ve seen [with] a lot of these public companies is if they are purchasing new rigs, they’re doing it with bitcoin, or they’re borrowing and paying back with bitcoin in a year’s time,” Reyna said. “Their debt positions aren’t as challenging as more of your sort of traditional corporations or factories that may finance debts five plus years or three plus years out, wherever they may be.”

Due to this, Reyna said that while crypto miners are highly correlated to the price of bitcoin, they do not necessarily need bitcoin to be at $67,000 to be profitable. When these companies look at what levels they can be profitable at, in some cases, there are break-evens right around $7,000. 

“Anything above that is sort of margin positive, and so I would say that generally, you’re seeing probably $20,000 to $25,000 is where we see some of those profit levels,” Reyna said. “So these miners can still be relatively attractive buys [and have] attractive valuations even at today’s levels based on where the markets currently traded at.”

For more news, information, and strategy, visit the Crypto Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X