Thanks to the mercurial rise of Bitcoin (CCC:BTC-USD), seemingly everyone wants to get on board the cryptocurrency train. You can’t really blame them. With BTC reaching well above $60,000 at its peak, this rally created a serious case of FOMO or fear of missing out. But smart contrarians have also eyeballed blockchain companies like Ebang International (NASDAQ:EBON). From a fundamental perspective, EBON stock offers many advantages that crypto coins can’t touch.
For one thing, you’re dealing with a real business that employs real people and generates real growth. Of course, I’m not suggesting that the cryptocurrency complex is irrelevant, because that’s not the case at all. However, it’s fair to point out that if you were looking to acquire a peer-to-peer (P2P) payment platform, you have many options besides Bitcoin. Indeed, BTC is more of a store of value these days than a function-driven crypto.
Second, EBON stock is tied to crypto mining, with the underlying company specializing in application-specific integrated circuits (ASICs). Ebang bills itself as “a leading bitcoin mining machine producer in the global market with steady access to wafer foundry capacity.” Theoretically, this should insulate shares from volatility because the business is tied to the infrastructure of cryptocurrencies rather than a specific coin.
Plus, ASICs cater to energy-intensive proof-of-work protocols like Bitcoin. That’s significant because while many crypto adherents see tremendous value in the less-energy intensive (and therefore more environmentally friendly) proof-of-stake protocols, getting there is a lot easier said than done. For now, it seems EBON stock has years of relevancy ahead.
Of course, innovation happens lightning-quick in the crypto market. Because major blockchain projects like Ethereum (CCC:ETH-USD) are pushing for a proof-of-stake transition, this race may have pressured EBON stock; hence, the equity unit’s volatility well ahead of the Bitcoin correction.
Still, proof-of-stake may be a minor challenge in the grand scheme of things.
Tailwind Could Be Trouble for EBON Stock
While it’s the obvious culprit, the inherent volatility of Bitcoin remains in my opinion the biggest culprit for EBON stock. Sure, I’m not breaking any new ground by saying this. However, just because something is low-hanging fruit doesn’t impugn its impact.
First, the reason people mine Bitcoin and other cryptocurrencies isn’t because they’re a bunch of do-gooders wishing to keep the ecosystem alive, like an indigenous and endangered community striving to maintain their language and culture against the rude intrusions of modernity and its inherent complacency.
No, crypto miners want to make a buck, several of it actually. It doesn’t help the cause if the BTC coin declines sharply in value, which it will do at some point. And if that some point is either now or soon, shareholders of EBON stock…