MARA, RIOT, SDIG, BTBT, BSGA: Bitcoin Mining Stocks Face Pressure Ahead of Feb. 10


Shares of Bitcoin mining stocks, including Riot Blockchain (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA), are under pressure after Sen. Elizabeth Warren gave the companies until Feb. 10 to provide information on their energy use and its impact on climate change.

Concept art of crypto mining with little figuring and a Bitcoin (BTC) token.
Source: Shutterstock

The February deadline also includes Stronghold Digital Mining (NASDAQ:SDIG), Bit Digital (NASDAQ:BTBT) and Blue Safari (NASDAQ:BSGA), which is merging with Bitdeer.

Importantly, this deadline comes as Warren expands her ongoing inquiry of Bitcoin (CCC:BTC-USD) miners’ “extraordinarily high energy usage” and its environmental impacts. The inquiry puts additional pressure on Bitcoin mining stocks amid great market volatility. Recent weeks have also seen plunges in digital assets such as Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD). RIOT and MARA stock have each fallen 40% so far in January.

What Happened With Bitcoin Mining Stocks

In the letter, Warren asked each crypto miner to detail electricity consumption, scaling plans, agreements with electricity companies, and impact on energy costs for consumers and small businesses. As part of this, she asked the miners to submit the information by Feb. 10.

“The extraordinarily high energy usage and carbon emissions associated with Bitcoin mining could undermine our hard work to tackle the climate crisis,” reads Warren’s letter.

Her inquiry is the latest in a series of political actions on cryptocurrency miners that targets their energy consumption. Notably, Bitcoin’s proof-of-work consensus protocol has attracted attention for its high usage. Lawmakers have held Congressional hearings to discuss mining, and regulators in the European Union have also called for a ban on proof-of-work.

At the same time that Warren’s demands for information on crypto miners’ energy use was released, media reports have also surfaced that President Joe Biden is preparing an executive order that would require government agencies to conduct risk analysis on cryptocurrencies as a national security threat. The reports say that the White House is expected to issue an executive order in the coming weeks about actions the U.S. government will take.

The rationale for the executive order is that cryptocurrencies allow users to more easily transfer money across borders. Additionally, the America Competes Act, is currently before Congress. The act would enable the U.S. Treasury Secretary to ban cryptocurrency exchanges from operating. The America Competes Act has not yet been passed by Congress, but is causing concerns among cryptocurrency operators and investors.

Why It Matters

Warren’s targeting of cryptocurrency miners is the latest example of lawmakers ratcheting up pressure on the cryptocurrency sector. Many industry players, investors and analysts fear that it is only a matter of time before miners, exchanges and the digital coins themselves are slapped with regulations.

This is all bad news, and comes at a difficult time for cryptocurrencies.

Bitcoin is currently trading at $37,150, which is 46% below its all-time high. Ethereum, at $2,440, has fallen 37% in the last month. The declining prices of cryptocurrencies is harming Bitcoin mining stocks. The scrutiny of lawmakers such as Warren, and threats of regulations, is adding to the pain for cryptocurrency mining stocks and their shareholders.

What’s Next

The next month will be important for cryptocurrency miners. In addition to the Feb. 10 deadline set by Warren, the White House executive order on cryptocurrencies is expected to be issued within weeks. Taken together, they could push the prices of stocks such as RIOT and MARA even lower. Investors should prepare themselves for greater volatility ahead as politicians and regulators keep their sights trained on the cryptocurrency industry.

On the date of publication, Joel Baglole 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 Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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