Why Shares of Riot Platforms, Hut 8 Mining, and Bitfarms Are Falling Today

What happened

Shares of several Bitcoin (CRYPTO: BTC) mining companies fell today along with the price of Bitcoin, which has dropped about 3.3% since the late afternoon yesterday and now trades around $29,500.

Shares of Riot Platforms (NASDAQ: RIOT) traded roughly 4.5% lower as of 1:30 p.m. ET today, paring some of its losses from earlier when it had been down about 10%.

Meanwhile, shares of the Canadian Bitcoin-mining companies Hut 8 Mining (NASDAQ: HUT) and Bitfarms (NASDAQ: BITF) traded roughly 7.7% and 3.2% lower, respectively. Both stocks had also been down more than 10% earlier today.

So what

Because Riot, Hut 8, and Bitfarms all mine and hold Bitcoin, the movement of the world's largest cryptocurrency seems to be one of the main drivers impacting their stock prices as well.

Person looking at downward stock chart on computer.

Image source: Getty Images.

One possible factor hurting Bitcoin today is that the U.S. Dollar Index, which looks at the strength of the dollar compared to other currencies, moved higher today. Because Bitcoin was created as an alternative to the mainstream financial system, it tends to have an inverse relationship to the dollar.

The dollar seemed to be moving higher on data today from the Empire State Manufacturing Index, which showed that business activity in New York increased for the first time in five months. This supports the idea that the economy is still healthy and could lead the Federal Reserve to raise interest rates yet again at its May meeting, as the agency continues to battle inflation. Rising interest rates have not been good for Bitcoin over the last year.

There's also been some chatter lately that interest rates could still end up staying higher for longer. That's despite the chaos in the banking sector that had recently led many to believe a recession would be here sooner than expected, and potentially lead to interest rate cuts. Bitcoin also rallied as several banks collapsed in March, but so far large banks have recently reported strong earnings to kick off earnings season.

For the most part, though, analysts seemed to shake off the drop in Bitcoin today after what has been an incredible rally this year that has seen the price of the token climb by close to 77.5%.

"Traders should be prepared that the $30,000 mark for the first cryptocurrency could act as solid resistance after it was rigid support in 2021," FxPro analyst Alex Kuptsikevich said, according to Barron's. "That said, technically, Bitcoin has already proven the end of the bear market by securing above key moving averages and steadily retreating from the bottom."

Now what

Given the run Bitcoin has been on, it would not be unusual for the cryptocurrency to take a breather every now and again. What's much less clear is how certain macroeconomic factors like interest rates and the trajectory of the dollar will play out, which can definitely impact Bitcoin and therefore crypto-related stocks.

Ultimately, I think it's worth it to have some exposure to Bitcoin in your portfolio and I do believe Bitcoin will be here long term. The Bitcoin miners will likely benefit as the price of the asset they mine and hold goes up, but I prefer to just own Bitcoin itself.

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Bram Berkowitz has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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