Bitcoin plunge creates bargains as firms eye M&A. Bernstein flags two stocks to buy

Mining stocks Riot, Marathon and CleanSpark will benefit as the halving rolls out, Bernstein says.
Big players will be able to scoop up struggling smaller rivals.
That’s an opportunity for traders.

Traders should seize on Bitcoin mining companies as the halving ripens the industry for consolidation.

That’s according to research firm Bernstein, which said in a report that investors currently look at mining stocks like Bitcoin proxies — a handy way to gain some kind of exposure to the cryptocurrency via the stock market. That means they may not be “differentiating the stronger names.”

But that could be about to change. Some companies are likely to come out as big winners as the industry goes through a huge shakeup in 2024, the analysts said.

Investors should pile into Riot and CleanSpark, Bernstein said. Analysts Gautam Chhugani and Mahika Sapra said they expect the market will “reward these names for superior execution.”

The commentary comes as miners brace for the halving, expected on April 20. The event, which happens every four years, cuts in half the Bitcoin rewards that miners receive for maintaining the blockchain.

In other words: The update will slash miners’ revenues while operational costs will remain the same. Smaller firms may then struggle to stay afloat, making them prime targets for acquisitions, the Bernstein analysts said.

Coinbase analysts made a similar prediction earlier this year.

Marathon, CleanSpark and Riot

The M&A part of the consolidation will be led by Marathon and CleanSpark, Bernstein said, while Riot will dominate in capacity expansion as it plans to start operations at its new facility in Corsicana, Texas by mid-April.

Join the community to get our latest stories and updates

Marathon and CleanSpark have already acquired new sites to the tune of about $285 million, Bernstein said.

Their strong balance sheets allow them “to acquire Bitcoin mining facilities available post-halving from the smaller/marginal players, which operate at higher cost and would be further challenged by halving,” Chhugani and Sapra wrote.

Riot’s Corsicana construction hit a snag in March when four county commissioners declined to approve a reinvestment zone for the plant, which would have enabled Riot to pay just half of that for the next 10 years.

Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.