SOS Limited Can Become a Long-Term Crypto Mining Play

Chinese blockchain services company SOS Limited (NYSE:SOS) has been one of the best-performing crypto mining stocks in the market. SOS stock is up a healthy 104% in the past three months, on the back of elevated short interest in the security. However, the company is quickly moving away from its meme stock tag with investments in the crypto mining business. Considering its impressive management team and sizeable cash flows, the company can make a big splash in the industry.

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SOS stock is a Chinese company that has been trading on the New York Stock Exchange since 2017. It was previously known as China Rapid Finance, operating a  “rescue business” for different companies operating in various segments. Despite a growing business generating healthy cash flows, it was unable to gain mainstream attention until now. A lot of it is down to the euphoria surrounding the cryptocurrency space at this time. Most analysts and industry insiders are bullish on this pivot in its business model. With that being said, let’s look at why this is the case.

Rapidly Expanding Mining Business

The primary reason investors are excited about SOS stock is its massive crypto mining firepower which spells trouble for its competition. Russell Krauss, the company’s vice chairman, has provided several updates about its mining business.

He states that SOS currently has 10,000 crypto-miners, of which 50% are already operations and delivering Bitcoin (CCC:BTC-USD) revenues. The other 50% is currently being installed and configured.  It expects a significant bump in revenues when the other 50% of crypto-miners are operational. The third batch of roughly 5,600 miners will be in deployment soon, which would take the tally up to 15,600 miners. To put things in perspective, industry stalwart Riot Blockchain (NASDAQ:RIOT) has roughly 11,500 miners operational, which points to a sizeable advantage for SOS.

Furthermore, SOS has signed a definitive agreement with a local Chinese hydropower station. It provides a cheap resource of renewable power for the company in carrying out its mining operations. Moreover, it has a strong relationship with the Chinese government, which will smooth out any regulatory troubles.

It recapitalized its balance sheet earlier in the year by raising $300 million in new capital. The finance allows it to further expand its crypto mining operations, its legacy business and invest in its much-talked-about cryptocurrency financial services division.

Outlook

There’s a lot to look forward to with SOS stock in the months to come. Its plans to pioneer the crypto world’s financial services business could be a watershed event for the industry. It will also solidify the company as the most powerful crypto miner in the world. Some of these fintech services include insurance, crypto loans, mobile payments, crowdfunding and others.

It is tough to forecast how things will play out considering the short interest in the stock in terms of price. Short interest is high, which points to another squeeze that could take SOS stock past its 52-week high of $15.88. The implied volatility is attractive for short-sellers, but I feel that it has the potential to be a long-term investment.

Final Word on SOS Stock

SOS stock has a lot of momentum, and for good reason. It could become the biggest player in the crypto mining world through its smart investment and leadership. Its crypto financial services division is likely to give it an edge over competitors. Therefore, it has the potential to become a long-term play in the fast-growing crypto business.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University. 


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