I must admit that Greenidge Generation Holdings (NASDAQ:GREE) stock is attractive in that the company has a unique idea.
It wraps up all the hottest trends – ESG investing, Bitcoin (CCC:BTC-USD) mining, green energy – in one neat little package with a $280 million market cap.
This ticks all the boxes for a new generation of investors who are willing to take a different path to the markets than their parents or older siblings have. It also fills a niche that will soon have more companies to follow: the all-in-one crypto feel-good stock.
ESG stocks may not have the massive growth potential of crypto, but crypto is becoming a significant energy hog. Studies show that it takes twice as much energy to mine $1 of Bitcoin as it does to mine $1 worth of copper or gold.
In this age where Gen X and Gen Z are getting older and have easy access to digital trading platforms, the divide is between making money buying meme stocks and crypto or investing in green stocks to build the future.
GREE stock asks, “Why choose?”
Well, there are a few reasons.
GREE Stock: The Crypto Miner Utility
In 2016, Greenidge took over an old power generation company in Dresden, N.Y. This is eight years after BTC was launched, but the early days of the cryptocurrency and its various competitors were pretty Wild West stuff.
In the early days, due to the relatively small community of people interested in this new type of vehicle, mining was a lot easier than it is now. You see, as more BTC is mined, it becomes exponentially more challenging to find the next ones.
Greenidge CEO Jeff Kirt is a firm believer in BTC and converted an old coal-fired power plant to start mining activities. The power plant is powered by natural gas, so it’s cleaner, but the company buys carbon offsets to make the operation carbon neutral.
GREE stock also has begun using an old print shop in South Carolina to mine coins using local nuclear power. There’s no doubt this is a noteworthy and interesting effort to mitigate some of the growing challenges of mining coins.
Here’s Where It Gets More Complex
The trouble is, there are some real challenges here, and they will expand as this “green” mining industry evolves.
First, there’s the volatility of BTC and other cryptos. After a number of boom and bust cycles, Wall Street looks like it’s finally on board with institutionalizing cryptocurrencies.
However, Wall Street isn’t in this for anything but profit. This is a side gig for most of the major players, and if the whole thing goes belly up most can walk away without too much damage.
GREE stock can’t. If BTC prices tank, its operations become more stressed than they already are.
What’s more, Greenidge also has a coal ash landfill to deal with in New York from the days when the power plant was burning coal. Granted, it’s turning this big sour lemon into lemonade by proposing to build a solar farm on top of that landfill.
It may be that the state and federal governments will be happy to simply cover this environmental issue with solar panels. If Greenidge has to remediate at some point, that’s going to cost serious money.
The Bottom Line on Greenidge
Even after the huge move in BTC in the past year, Greenidge still has negative earnings. It’s also continuing to expand operations, which seems a bit aggressive given the volatility of its core product.
Yes, the U.S. dollar and other national currencies are fiat currencies, but BTC and other cryptos also have no fundamental store of value either.
Remember that the Securities and Exchange Commission is stepping up its efforts to regulate BTC and those effects may be significant in a bad way.
Finally, the old saying, “if it sounds too good to be true, it probably is,” keeps rattling around in my head. And GREE stock seems to be leaning in that direction.
On the date of publication, GS Early did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
GS Early (aka, Gregg Early) has been an award-winning financial writer and editor for nearly three decades, working with many of the leading financial editors and publishers during that time. He’s seen a few things and hears more.
