Why This Crypto Mining Stock Soared 26% Today

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What happened

Sphere 3D (NASDAQ: ANY) shares jumped 26% on Wednesday after its future merger partner Gryphon Digital Mining announced it had received a shipment of machines that will be used to mine Bitcoin (CRYPTO: BTC) in a carbon neutral manner. . Shares of the stock rose 35% on the news and are now up nearly 400% year-to-date.

So what

On Wednesday, Gryphon Digital Mining announced that it has installed its first batch of 7,200 S19J Pro Antminers and will continue to receive 600 machines per month.

Image source: Getty Images.

What does Sphere 3D have to do with it? Well, the company, which was originally a cloud-based software provider, has taken to trying to mine Bitcoin in an environmentally friendly way. To do this, it has agreed to merge with Gryphon Digital Mining. (The merger has not yet been finalized.)

To help fund purchases of Bitcoin mining equipment, Sphere 3D is raising $ 192 million by selling common stocks and warrants. In addition to the 7,200 machines that Gryphon is installing, Sphere 3D plans to purchase 60,000 crypto mining machines that will be powered by renewable energy.

Now what

Bitcoin mining is an exciting development for some investors, especially those who are bullish on cryptocurrencies, in general. But long-term fundamental investors should stay away from Sphere 3D stocks.

The company has not released a quarterly report since November of last year. In this report, it was clear that its software business was declining rapidly. This pivot to Bitcoin mining should be a huge red flag and keep all investors away from Sphere 3D stock for now.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a premium Motley Fool consulting service. Were motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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