The shares of bitcoin mining companies on Wednesday got slammed, and are on track to post a third straight decline as prices of the most prominent cryptocurrency and the broader virtual-asset market slumps.
At last check, shares of bitcoin miner Riot Blockchain Inc.
were down by about 14%, while rival Marathon Patent Group Inc.
was seeing its shares down 17% in Wednesday midday trading.
The three-session slide for both companies comes as bitcoins on CoinDesk
were down 7.2% so far this week, and valued at $34,096 on Wednesday.
The slump in bitcoins comes as incoming President Joe Biden’s nominee for Treasury Secretary, Janet Yellen, during a Senate confirmation hearing on Tuesday suggested curtailing the use of cryptos, which she said are prone to be used for malfeasance.
“And I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn’t occur through those channels,” Yellen said.
Bitcoin miners are particularly sensitive to swings in the price of the crypto.
Miners like Marathon and Riot Blockchain, play a key role in maintaining bitcoin’s self-sustaining network, running the decentralized software that verifies transactions.
Digital mining refers to the use of high-powered computers to generate new units of the cryptocurrency, by solving complex problems that have become harder over the years by virtue of how bitcoins were originally encoded.
Shares of those companies can be even more volatile than bitcoin by some measures.
Marathon Patent Group shares are up 1,715% over the past 12 months, while those for Riot have surged 1,414%, according to FactSet data. Bitcoin prices, comparatively, are up 287% over the past 12-month period.
Higher prices for bitcoins can justify the high cost of mining for new coins but when prices retreat mining stocks tend to see outsize moves lower as well. Currently the daily profit from one bitcoin miner is $10.68, according to mining-calculator site BTC.com.
Wild swings in prices for bitcoin and other cryptos make miners particularly risky investments.