Editor’s Note: This article was updated to clarify that GREE’s air permit has been approved by the County, but is still under consideration by the New York Department of Environmental Conservation.
It’s no shock Greenidge Generation (NASDAQ:GREE) has been bouncing back lately. After all, bullish sentiment is returning to GREE stock now that Bitcoin (CCC:BTC-USD), the crypto it mines, is up near all-time highs. But there’s also a longer-term catalyst that GREE fans have high hopes about: Its expansion plans.
GREE’s latest success comes after an extended period of lackluster performance. This was triggered by the completion of a reverse merger, where it merged with publicly traded Support.com, a provider of outsourced customer support services.
As you may remember, SPRT stock (what it used to be called) skyrocketed in price ahead of the Greenidge deal. Much of its success here was likely due to its appeal as a short-squeeze play.
However, once the deal closed Sept. 15, shares went into free fall. Investors didn’t find the terms of the deal appealing (which resulted in an immediate haircut for existing SPRT shareholders), and they cashed out.
Nevertheless, what’s done is done. Investors who have held GREE stock since it traded for much higher prices (split-adjusted) may still be underwater. But there may be two paths for the stock to make its way back to higher prices.
Let’s dive in, and find out.
What Makes GREE Stock Stand Out Among the Crypto Mining Plays?
With so many crypto mining stocks out there, investors have plenty of ways to gain exposure to this fast-growing industry. What in particular may make Greenidge Generation a cut above the rest?
There is one key factor that makes GREE stock stand out: the company is vertically integrated. In other words, instead of being dependent on a third-party (like a utility company) to provide it with the electricity needed to run its mining rigs, it may have more control over its energy costs.
Having said that, this aspect to Greenidge isn’t entirely without its negatives. The publicity from its debut in the public markets has brought with it more scrutiny. Now aware of the company, and the possible environmental impact of its natural gas-powered facility, it’s now in the crosshairs of climate activists.
However, I wouldn’t consider the environmental concerns a deal breaker here. So far, as I explained further below, New York State hasn’t taken action against its flagship facility. Also, with its plans to develop new Bitcoin mining facilities in other U.S. states, Greenidge is not only expanding its operations. It’s also mitigating its regulatory risks.
There Are Two Paths for a GREE Rebound
Besides the overall strong performance of Bitcoin, something else has been helping GREE stock begin to bounce back. Despite all the hullabaloo about the pollution from its New York facility, the county has supported the renewal of its air permit. While this doesn’t indicate approval of the permit by the New York Department of Environmental Conservation, it’s a step in the right direction for the company. If approved, it will enable it to continue operating in this space.
These two factors are helping to move Greenidge higher once again. But what’s going to keep it moving in the right direction?
Fortunately, there are not one, but two ways the stock could move higher. First, of course, is if Bitcoin prices continue to rise. Due to high operating leverage (i.e., largely fixed costs to mine), increases in BTC prices can result in outsized increases in the company’s profitability.
The second pathway is through continued success with the buildout of its operations. This may be the better pathway, as it’s something that’s more within the company’s control. The first path is too dependent on an upward trajectory in the hyper-volatile cryptocurrency Bitcoin. An expansion of its operations, however, could outweigh BTC holding steady, or pulling back, from current levels.
A lot still needs to play out. Yet there’s certainly potential for long-term growth with this stock.
The Verdict on GREE Stock
The SPRT/GREE short squeeze may have burned many traders a few months back. But don’t let that cloud your judgement of the stock’s greater potential.
I’m not saying it’s a slam dunk that shares are soaring to higher prices from here. Far from it, as this stock, much like the underlying crypto it mines, remains subject to high volatility.
Nevertheless, given its high potential, and B-rating in Portfolio Grader, investors bullish on crypto (and/or those looking for mining plays), may want to keep on their radar. Depending on where Bitcoin prices head from here and/or how successfully this company grows its operations, it stands to become a long-term winner for investors looking at it now. That’s especially true after its big drop in price.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article. On the date of publication, the InvestorPlace Research Staff member primarily responsible for this article held a LONG position in Bitcoin. They did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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