Cryptocurrencies aren’t for everyone. However, if you’re still looking for exposure, you may want to consider crypto mining stocks, like SOS Ltd. (NYSE:SOS). After all, the higher cryptocurrencies like Bitcoin (CCC:BTC-USD) go, the higher the miners go. In this article, I’ll outline why you should consider SOS stock.
Between Oct. 1 and today, Bitcoin ran from $10,626 to $56,072.
Miners were also explosive over the same time frame.
- Riot Blockchain (NASDAQ:RIOT) ran from $2.65 to $47.87
- Canaan Creative (NASDAQ:CAN) ran from $1.90 to $19.34
- Bit Digital (NASDAQ:BTBT) ran from about $4.02 to $13.91
- HIVE Blockchain (OTCMKTS:HVBTF) ran from 27 cents to $3.30
Since Oct. 1, SOS stock has run from $1.95 to $6.12. While SOS did pull back with Bitcoin over the last few days, it could easily see higher highs. In fact, imagine what could happen to SOS if MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor is right about Bitcoin being worth $100 trillion one day.
Use Weakness in SOS Ltd. As a Reason to Buy
Not long ago, SOS was attacked by short-sellers at Hindenburg Research.
In fact, on Feb. 26, they tweeted, “We are short $SOS, which we believe to be an obvious China-based shell game reanimating the corpse of a former China based company that earlier imploded 90% from its highs. We think SOS is a $0 and has significant regulatory risk.”
However, the ensuing pullback didn’t last long. The short attack carried no weight. For one, SOS called the allegations “distorted, misleading, and unsubstantiated,” as quoted in a company press release. Two, InvestorPlace contributor Chris MacDonald noted, “Scorpio VC’s research into Hindenburg’s short report highlighted discrepancies with the allegations. The company address, Scorpio claims, was correctly disclosed and other issues in the short report were disputed.”
To date, I have yet to hear any follow up news from Hindenburg on their allegations.
All I know is with the bogus allegations priced in, I’d use SOS weakness as a reason to buy.
SOS Has Big Opportunity Ahead with Cryptocurrencies
In February, the company took 5,000 mining rigs for Bitcoin and Ethereum (CCC:ETH-USD) live. It was then awarded its first Bitcoin. Then, by March, it added another 5,000 mining rigs. “Together with its prior fleet of 5,000 mining rigs, the Company expects the combined fleet to have the capacity to calculate an average of 353 Peta-Hashes per second (PH/s) for mining Bitcoin and 707 Giga-Hashes per second (GH/s) for mining Ether (ETH),” reported the company in a March 15 press release.
Even better, for the current quarter, it expects to mine about 41 bitcoin, and up to 909 Ethereum coins. Coupled with its mining equipment update, and the strength of the cryptocurrency market, I’d like to see the SOS stock closer to its $15.88 highs, near-term. Going forward, the company expects to add another batch of mining rigs.
The Bottom Line on SOS Stock
With cryptocurrencies expected to surge higher, miners like SOS are sure to follow. In fact, there’s a powerful history of that. Allegations of wrongdoing seem to have been fully priced into the now oversold stock. In addition, it has 10,000 mining rigs up and running, with expectations for another batch of rigs shortly. It was also awarded its first Bitcoin.
Again, cryptocurrencies aren’t for everyone. But if you’re still looking for strong exposure, consider mining stocks like SOS. As I said earlier, imagine what could happen to SOS if MicroStrategy CEO Michael Saylor is right about Bitcoin being worth $100 trillion one day. Use the weakness in SOS as an opportunity to buy. Near-term, I’d like to see SOS challenge a prior high of $15.88. Longer-term, as Bitcoin pops, I’d like to see it double, if not triple.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.