Bitcoin
3 Crypto Mining Stocks to Buy for Bitcoin-Sized Gains
For many, investing directly in cryptocurrencies may seem inherently risky. After all, most cryptocurrencies don’t have much support for their value other than investor interest. Once enthusiasm wanes or funding dries up, many crypto projects simply cease to exist, leaving casual retail investors high and dry. However, there may be a safer way to invest in the cryptocurrency industry as a whole. Enter these crypto mining stocks.
In case of Bitcoin (BTC-USD), cryptography itself cannot exist without an entire industry of computer and integrated circuit farms mining it. Thus, investing in the industry that drives the availability of crypto is a good way to protect yourself from the inherent risk of the currency itself.
For investors looking to invest in crypto mining stocks, there are two main criteria to focus on. The first is the profitability and efficiency of how miners do it. The second is how the company manages its Bitcoin reserve once it is mined. This is because these two factors directly control the company’s revenue and liquidity.
Riot Platforms (RIOT)
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A long-time competitor in the Bitcoin mining race, Riot Platforms (NASDAQ:REBELLION) has been in the news lately for its expansion attempts. Recently, RIOT has been working to acquire one of its main rivals Bit Farms (NASDAQ:BITF) which resulted in RIOT taking 12% ownership of the smaller company. In an attempt to resist, Bitfarms decided to take on a poison pill approach to diluting Riot’s control and making it easier to obtain other shareholders more control.
While it’s hard to say what the outcome will be, it’s a win-win situation for Riot Platforms holders. This is because, even if it fails, RIOT will keep the money it was planning for an acquisition, meaning its reserves will remain full. This bodes well for its long-term stability and weathering any Bitcoin-related economic downturns.
Additionally, the company’s Bitcoin mining revenue jumped 55% from $48 million to $74.5 million year-over-year in the first quarter of 2024. This underscores the company’s strategy of maintaining strong cash flow, which will be even more true if it integrates with Bitfarms.
Cabin 8 Mining (Hut)
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When a company grows quarterly revenue year after year but still focuses on reducing expenses, no one wins more than shareholders. This is exactly the trajectory that Cabin 8 Mining (NASDAQ:CABIN) continues with its current focus on cost reduction. The decision to do so comes as a result of the merger of all company shares with USBTC, which brought it into line with proprietary software and operational principles.
As a result, Hut 8 was able to highlight its Drumheller facility as a high-cost, low-efficiency location for Bitcoin mining, ultimately deciding to close it in March 2024. In the same month, HUT announced its Q1 financials. to 2024 with an impressive $30 million in Bitcoin mining revenue. This represents an impressive 300% increase year-over-year of $87.6 million in revenue in March 2023.
In addition to strong cash flow and smart facility management, the company’s extensive Bitcoin holdings have given it the capital needed to upgrade its aging Bitcoin infrastructure. This protects investors from the potential concerns that some analysts have surrounding the long-term prospects of Hut, Eight and market share.
Valkyrie Bitcoin Miners ETF (WGMI)
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One way to protect yourself against the competitive nature of the bitcoin mining industry is to invest in an exchange-traded fund (ETF) aggregated from all of its various competitors. This is the advantage that Valkyrie Bitcoin Miners ETF (NASDAQ:WGMI) offers investors looking for industry exposure without investing directly in the operations of any company.
In addition to just offering exposure to mining companies, WGMI also offers some protection to its value by maintaining ancillary contributors to the industry. This means that 17% of its current composition is made up of companies such as Nvidia (NASDAQ:NVDA) It is CleanSpark (NASDAQ:CLSK).
Over the past two years, stocks have underperformed S&P 500 per 22%, yielding losses of 17% for the index’s 5% gain. However, this can be attributed to a relatively nascent crypto industry, which could change depending on political attitudes around Bitcoin. As a result, WGMI represents the markets’ general attitude towards cryptocurrencies. Make a smart move and grab these crypto mining stocks.
As of the date of publication, Viktor Zarev did not hold (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 InvestorPlace.com Publishing Guidelines.
Viktor Zarev is a scientist, researcher, and writer who specializes in explaining the complex world of technology stocks through a dedication to accuracy and understanding.