Remember all the hype in April around the crypto. It seems to have cooled with everything crypto showing the red sign of dip. Many companies took advantage of the crypto fever and launched Bitcoin ETFs. The cryptocurrency exchange Coinbase (NASDAQ: COIN) even launched its initial public offering (IPO) in April. Since then, Coinbase stock has nothing but dipped. It is down 31% so far and still falling. But two crypto-related stocks have started rallying in the last five days.
Investing in crypto-related stocks
I agree that no crypto-related stuff is doing well. But there are crypto mining stocks that have surged in the last five days. When these stocks begin to rally, you buy before they gather momentum.
There are many types of crypto stocks:
- Crypto ETFs
- Crypto exchanges stocks
- Blockchain technology stocks
- Semiconductor stocks that supply high-performance computing chips
Among the four, the last two are better alternatives than the first two. The best semiconductor stocks for crypto exposure are Advanced Micro Devices and Nvidia. Crypto miners and crypto mining farms use their graphics processing units (GPU) to get the high-performance computing needed to mine cryptocurrencies. But they trade on Nasdaq.
If you are looking for TSX stocks, then Hive Blockchain Technologies (TSXV:HIVE) and Hut 8 Mining (NASDAQ: HUT)(TSXV:HUT) are a buy. These two stocks surged 18% and 37.8% in the last five days.
The thing with crypto mining stocks
Hive and Hut 8 are blockchain technology companies. They earn most of their revenue from mining Bitcoin and Ethereum. They mine their own crypto, maintain crypto inventory, and sell these coins when they need money. Hive and Hut also earn revenue by offering GPU hosting services to other crypto miners for a fee.
Hive and Hut 8 run data centre farms. They keep buying new GPUs and other high-performance computing chips to increase their mining capacity. They also invest in software that can optimize computing power and consume less electricity.
On June 30, Hut released a press release stating that it is buying US$44 million worth of new MicroBT mining machines expected for delivery in October. The next day, Hive announced the purchase of over US$66 million worth of NVIDIA’s data centre GPUs. The fact that they are buying new computing capacity even when BTC prices fell shows that they are expereing growth in the future.
Hive is exploring new avenues for GPU computing like artificial intelligence (AI), graphic rendering, and blockchain computing. While Hut has not expressed its interest in alternative use of GPU computing, it can explore these alternatives if the need arises.
Investor takeaway
At present, Hut and Hive stocks are influenced by BTC and Ethereum prices. But the growing use of blockchain technology will help these companies diversify their revenue streams. Even Warren Buffett is bullish on blockchain technology, which is a public ledger that decentralizes any transaction.
Blockchain is the technology of the future once companies figure out how to use it in various tasks. Think of it like AI in 2014, when researchers were exploring the many applications of AI.
