Cipher Mining Confirms Risks of Crypto Wave By TipRanks

With interest spiking in virtual currencies, many people who missed the initial boat may be tempted to acquire shares of crypto-mining firms like Cipher Mining (CIFR). However, investors ought to be extremely careful, only putting to risk capital they can afford to lose.

On paper, Cipher Mining — a blockchain mining specialist with a focus on renewable energy utilization — corrals two of the most talked-about business items over the trailing-year period: cryptocurrencies and special purpose acquisition companies. Heavily hyped as democratized investment vehicles that give the average Joe a fighting chance against Wall Street’s alpha wolves, they have instead left a questionable performance record, presenting an awkward backdrop for CIFR stock.

Back in October of last year, Good Works Acquisition Corp. — a blank-check firm seeking a business combination with a technology company — launched Cipher Mining’s initial public offering, distributing 15 million shares priced at $10 per unit. In March of this year, Reuters reported that the SPAC established a merger agreement with Cipher Mining, a seemingly ideal choice, given the sharp rise in (BTC-USD) price.

In a two-for-one deal, regular retail investors could participate in opportunities from which they would ordinarily be boxed out. On the SPAC front, shell companies like Good Works allow anybody to participate in any phase of the journey, from pre-merger to post-combination. Thus, a Bloomberg Businessweek opinion piece pejoratively (but nevertheless accurately) described SPACs as the poor man’s private equity funds.

For bitcoin mining, the process of extracting BTC through algorithmic-intensive computing processes had become too onerous, as the crypto coin’s price soared exponentially from mere pennies to the five-digit rate it commands today. Yet thanks to publicly traded enterprises like Cipher Mining, anybody with a brokerage account could pick up shares of CIFR stock, thereby connecting retail investors to the broader digital asset narrative.

Initially, both avenues seemed to provide fresh prospects for everyday investors. However, as time went on, the picture became murkier. (See Cipher Mining stock charts on TipRanks)

CIFR Stock Depends Greatly on Pure Market Sentiment

Hailed as a democratized platform, the SPAC vehicle allowed anyone to buy new shares of a public enterprise at its initial offering price, theoretically putting regular folks on the same level as institutional buyers of traditional IPOs. However, those participants who failed to perform their due diligence quickly realized that SPAC-based IPOs tend to be extremely dilutive.

So far this year, business combinations have under-performed benchmark indices, as equity-rich sponsors and major backers took care of number one, leaving retail buyers scrounging for scraps. Unfortunately, CIFR stock hasn’t been able to convincingly beat the negative reputation of…