Bitcoin is currently trading close to its all-time high of US$19,450 (CA$25,453). Over the past month, the cryptocurrency has surged 50%. In fact, it has added tens of billions in aggregate value this week alone. Investors are optimistic it could break its record and surge to a new all-time high by the end of the year.
That’s great news for early investors who already have exposure. However, if you’re still looking for a way to add cryptocurrencies to your portfolio, here’s what you should know.
Why is Bitcoin surging?
Some investors may remember the boom-bust cycles Bitcoin has been through in the past. In 2017, the popular digital currency surged 1,745% within a few months. Ultimately, the digital currency crashed to US$3,400 by the end of 2018.
This time, the market is much more mature, and some savvy investors are getting involved. The reason Bitcoin is surging is because institutional investors are starting to recognize the value of this digital currency. Hedge fund legends such as Stanley Druckenmiller and Paul Tudor Jones have invested in it this year.
Meanwhile, tech giants such as Square and PayPal have added cryptocurrencies to their platforms and balance sheets. This uptick in demand from tech giants and professional investors is probably the reason why Bitcoin is surging again.
Invest in Canadian Bitcoin stocks
Canadians can probably buy Bitcoin directly through their regular trading app. However, investors looking for an added layer of security could invest in a Bitcoin mining stock instead.
HIVE Blockchain Technologies (TSXV:HIVE) is a good example. The stock is up 622% year to date, closely tracking the rise in Bitcoin’s value. The company owns and operates server farms that generate Bitcoin by solving complex mathematical puzzles (a process called mining).
Over the years, HIVE has generated BTC and Ethereum worth millions of dollars. The company sells some of these freshly generated cryptocurrencies to fund its expansion. At the moment, it operates facilities in Canada, Sweden, and Iceland.
However, the company also retains a portion of the cryptocurrency as long-term investments. As of September, 2020, HIVE reportedly had US$18.3 million (CA$24 million) in cash, Bitcoin, Ethereum, and other digital currencies on its books. As cryptocurrencies appreciate in value, this reserve should surge alongside it.
That’s what makes HIVE such a good proxy for Bitcoin and the cryptocurrency space.
Another proxy is Hut 8 Mining (TSXV:HUT). Unlike HIVE, Hut operates only in Canada — specifically, in Alberta. The company has mined a total of 12,305 Bitcoin since its inception and retained over 3,496 of them. At the current market price, the company’s cryptocurrency reserves are worth US$62.9 million or C$82.3 million. Meanwhile, the company’s market capitalization is $130 million.
Hut 8 is probably an overlooked opportunity for investors seeking exposure to Bitcoin.
Bitcoin is surging again. Interest from hedge fund legends and tech giants is probably propelling this latest boom. Canadian investors can add overlooked Bitcoin mining stocks such as HIVE or Hut to gain exposure.
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Fool contributor Vishesh Raisinghani owns Bitcoin and Ethereum. Tom Gardner owns shares of Square. The Motley Fool owns shares of and recommends PayPal Holdings and Square and recommends the following options: long January 2022 $75 calls on PayPal Holdings.