Greenidge Generation Is a Cautious Buy After a Steep Post-Merger Drop
InvestorPlace - Stock Market News, Stock Advice & Trading Tips GREE stock is suffering from the inevitable post-merger dip. However, it will recover as Bitcoin continues to gain in both...
The Greenidge Generation (NASDAQ:GREE) merger with Support.com is in the books. It is an interesting amalgam of emerging technologies and tech support along with customer service capabilities. However, investors were quick to sell GREE stock before the ink was dry.
Although it was unsurprising, those with a long-term perspective got hurt badly by the selloff. That is especially concerning since the company is servicing an interesting niche.
Greenidge is a vertically integrated Bitcoin (CCC:BTC-USD) mining company that produces and sells its power. Its business model is unlike those of Riot Blockchain (NASDAQ:RIOT) and Marathon Digital Holdings (NASDAQ:MARA), which have to buy from third parties.
The company owns a facility with 106 megawatts (MW) of Bitcoin mining capacity as well. Greenidge Generation has an advantage because its operational activities are protected from fluctuations in electricity prices. However, at the same time, potential regulatory problems could also hamper prospects.
Bitcoin Is the Main Reason for Bullishness
Depending on which side of the aisle you’re on, Bitcoin is either a boon to the economy or a bane to sustainability. However, one thing is for sure — its price trajectory is onward and upward.
There are excellent pieces published on InvestorPlace that delve into why that is the case. Time does not permit me to get into why Bitcoin will continue to progress at a rapid pace, but the bull thesis is strong.
Yesterday, Bitcoin’s price went above $63,000 after hovering around $60,000 for the past few days. This exciting development shows there’s more than just hype behind this revolutionary new currency. It is especially impressive considering the coin’s price was around $15,000 just a year ago.
Bitcoin lost about half its value by mid-July after going to record highs in mid-April. Since then, it has quickly made up lost ground. Yes, there were dips along the way. But we have not seen a crash that compares to 2017.
Additionally, institutional investors and large financial organizations are starting to accept this digital asset. For example, PayPal (NASDAQ:PYPL) and Square (NYSE:SQ) allow their users to purchase, sell and hold cryptocurrencies through their platforms. Other financial institutions are also joining in.
From a regulatory standpoint, the Federal Reserve is less likely to take an aggressive a stance against crypto as was the case in China. Although there are calls for greater oversight, that does not mean much in the grand scheme of things.
All of this means Bitcoin will enjoy its time in the sun because of broader policies and the institutional uptake at the moment. This will indirectly boost GREE stock.
What Sets It Apart from Other Miners?
There are not many crypto mining stocks out there. Riot Blockchain and Marathon Digital Holdings are the only other major players in the field so far, and Greenidge Generation has advantages over both.
Both of these competitors trade at steep premiums, and it’s understandable why. Crypto is a high octane industry that is subject to wild swings. So, when Bitcoin does well, you will immediately see a rise in mining stocks.
However, ultimately you need to decide whether to invest in a stock or not based on fundamental analysis. In that respect, GREE stock gets top marks. It does not have to rely on third parties for its energy sources and trades cheaply considering this potential. Plus, it benefits from tax loss carryforwards from its merger with Support.com.
Greenidge Generation contrasts well with SOS (NYSE:SOS), which is still struggling to define its operations. And other big-name miners do not have the company’s power generation facilities.
The only thing that could potentially harm Greenidge Generation is that natural gas is still a highly regulated industry at multiple levels of government. We already know several governments are fearful of the long-term energy cost of crypto mining operations.
The Future Is Bright for GREE Stock
There are very few areas of the market that are as confusing as the crypto space. But the fundamentals of investing remain the same. You need to pick a company that has the best chance to succeed within the circumstances.
On that note, Greenidge Generation has all the tools to do well within its niche. The post-merger drop in price is the icing on the cake. Grab GREE stock at a discount while you can; the near-term catalysts are too good to ignore.
On the publication date, Faizan Farooque 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.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.
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