2 Crypto Assets to Consider if Bitcoin Delivers on its Promise

If Bitcoin reaches US$20,000 apiece and you buy, you can expect five times growth in capital if it delivers on the US$100,000 promise.

| More on:
cryptocurrency, crypto, blockcahin

Image source: Getty Images

It’s a bit difficult to set a precedent for Bitcoin when it’s the cryptocurrency that sets a precedent for most other cryptos. You can’t draw parallels from the stock market, because there are no financial fundamentals of the underlying company to monitor and assess the “health” of the asset. Commodities, though influenced by speculation, mostly get their valuation from the demand and supply dynamics of their industry.

So, all you are left with is speculation when it comes to Bitcoin. Many conservative, old-school investors still believe that it’s not an asset worth considering. The most optimistic crypto investors and experts place its future peak value at US$500,000. But if you look at Bitcoin’s “promise” from a practical perspective, the US$100,000 number looks both ambitious and attainable.

In 2021, Bitcoin tried and failed to reach the US$70,000 mark, and with just a few weeks left till the year ends, the chances of the crypto reaching US$100,000 seem low. But even if it gets there in 2022, you can still double your capital with Bitcoin by buying now when it’s trading just below US$50,000. And if you don’t want to buy the asset itself, which you can’t keep in a registered account, there are two crypto stocks you might want to consider.

An Alberta-based crypto miner

Hut 8 Mining (TSX:HUT)(NASDAQ:HUT) has been tracking Bitcoin’s rise and fall quite faithfully, and following the recent slump, the mining company has seen its market value drop by almost 39%. This fall is harder than Bitcoin’s own, but if history is any indication, the stock’s rise would also be much more significant than Bitcoin’s.

The company has two mining centres in Alberta, which allows the company access to a variety of power options, though few of them are purely “green.” That’s a different ESG/cost balance that many other miners focused on expunging Bitcoin’s energy “criminal record” are offering. The company is expected to add a lot of mining capacity in the coming year.

A Quebec-based crypto miner

Unlike Hut 8, Bitfarms (TSX:BITF)(NASDAQ:BITF) prides itself in powering its crypto operations (with a total capacity of 106 MW) via clean hydropower. It has five operational sites in Quebec (and one in the U.S.), and five others are in the pipeline, ready to come online. The focus on hydropower is smart not just from an ESG perspective but also from a cost perspective.

Aside from Canada and the U.S., where it’s paying about four and three cents on average for every KW of power it consumes, the company has also bought long-term contracts in Argentina to lock in amazing electricity prices. The low-cost mining allows it to bring down the average cost of each Bitcoin mined to about US$6,900.

Foolish takeaway

Both crypto-focused tech stocks have slumped following the lead of the underlying asset, and they might offer investors a bit more room to buy when Bitcoin starts spiking again since they usually don’t move up as fast as Bitcoin does when it’s recovering. So, it’s a good idea to keep an eye on them and buy just before the upward trend sets.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

grow dividends

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally

Three TSX stocks are rising amid the elevated market volatility due to rate-cut uncertainties and geopolitical risks.

Read more »

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

Here’s the Average CPP Benefit at Age 70 in 2024

Canadian retirees can supplement their CPP payout by investing in blue-chip dividend stocks such as Enbridge.

Read more »

woman data analyze
Tech Stocks

1 Stock I’d Drop From the “Magnificent 7” and 1 I’d Add

Tesla (NASDAQ:TSLA) stock is part of the Magnificent Seven, but Shopify (TSX:SHOP) is growing faster.

Read more »

Gas pipelines
Dividend Stocks

Is Enbridge the Best Dividend Stock for You?

Enbridge now offer a dividend yield of 8%.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Thursday, April 18

Rising metal prices could lift the main TSX index at the open today as focus remains on the ongoing geopolitical…

Read more »

Hand arranging wood block stacking as step stair with arrow up.

2 Pandemic Stocks That Are Still Rising, and 1 Offering a Major Deal

There are some pandemic stocks that crashed and burned, while others have made a massive comeback. And this one stock…

Read more »

Supermarket aisle with empty green shopping cart

CRA: Will You Receive a Grocery Rebate in 2024?

The grocery rebate was introduced as a one-time tax credit for low-income Canadian households to offset higher prices.

Read more »

question marks written reminders tickets

BCE Stock’s Dividend Yield Hits 9%—Is it Finally Time to Buy?

BCE (TSX:BCE) stock has a super-swollen dividend yield right now as it passes 9%.

Read more »