This Crypto Stock Is the Only One I'd Buy

This Crypto Stock Is the Only One I’d Buy

Bitcoin is back on the rise, but instead of dishing out for the volatile price, maybe consider this top crypto stock instead.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published August 1, 2024 10:30 am EDT

Cryptocurrency remains a pretty tricky field when it comes to investing. We’ve seen this time and again over the last few years. The price of Bitcoin (CRYPTO:BTC), in particular, has been staggering, practically making it to US$100,000 before falling backwards.

Yet these days, it seems like there have been more upward movements rather than downward. This comes down to a few recent moves in the United States. So, let’s get into them and why there is only one crypto stock I would buy in support of them.

cryptocurrency, crypto, blockcahin — Image source: Getty Images

What happened?

There were two major announcements this week that could be influencing the price of crypto, specifically Bitcoin. First, former president Donald Trump stated several pro-Bitcoin items.

At the Bitcoin 2024 Conference, he expressed strong support for Bitcoin, including a pledge to halt the sale of Bitcoin held by the U.S. government and advocating for a favourable regulatory framework. He also promised to support Bitcoin mining in the U.S. and uphold the right to self-custody for Bitcoin holders if re-elected. These statements are seen as part of his broader strategy to appeal to the cryptocurrency community.

Furthermore, there was another item that caused the price to move. The U.S. government recently seized a significant amount of Bitcoin connected to the Silk Road, and the possibility of auctioning off these assets could influence market dynamics. Less Bitcoin on the market can contribute to a price increase. When the supply of Bitcoin decreases, and demand remains constant or increases, it can create upward pressure on the price. The recent seizure of Bitcoin by the U.S. government and its potential removal from the market, even temporarily, can reduce the available supply.

Should you buy Bitcoin?

With more exchange-traded funds (ETF), positive momentum, and statements from the U.S. government in support of cryptocurrency, Bitcoin does look like a good investment — at least, if you can afford it.

The price as of writing stands at US$66,460, far from what most investors can afford. And while you could get into some ETFs, I would perhaps wait until the Bitcoin halving event occurs before diving in.

Yet, instead, there is another area of the cryptocurrency market to buy into, and that’s mining. Investing in Bitcoin mining companies can be a good idea for several reasons. Bitcoin mining can be highly profitable, especially during bull markets when Bitcoin prices are high. Mining companies often benefit from economies of scale, reducing costs, and increasing margins.

The demand for Bitcoin continues to grow, and mining companies are well-positioned to capitalize on this trend. Mining companies offer exposure to the cryptocurrency market without directly holding volatile assets. And when it comes to diversification, there is really just one I would pick up.

Hut 8 stock

Earnings are due this month for Hut 8 (TSX:HUT), and it’s why I would get in before the probable rise in price. Hut stock is a great investment for a variety of reasons. Hut 8 has secured significant investments, such as the recent $150 million from Coatue, to develop next-generation artificial intelligence (AI) infrastructure, enhancing its growth prospects.

Furthermore, it is a leading operator in large-scale energy infrastructure and has shown resilience and growth in the crypto-mining sector. Hut 8 is actively expanding its operations, including new sites and increased energy capacity.

As for earnings, the company continues to demonstrate strength. During the first quarter, Hut 8 stock reported revenue of $51.7 million, a net income attributable to Hut 8 of $250.9 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $297.0 million.

These results reflect significant profitability and operational efficiency improvements. The company highlighted its strategic investments in AI infrastructure and expansion plans as key drivers for future growth. This strong financial performance underscores Hut 8’s position as a leading player in the cryptocurrency mining sector.

Bottom line

Bitcoin is on the rise, but its price right now looks far out of reach. Meanwhile, the price can still be quite volatile. That’s why mining companies like Hut 8 stock are a great option, especially when they offer more diversification as well.

So, with shares up 6% this week, now could be a great time to get in on this crypto stock.