3 Stocks Primed to Deliver 10X Gains in a Crypto Bull Market
A crypto bull market could be on the horizon, and history shows certain stocks tend to dramatically outperform major cryptocurrencies when prices are surging. Despite Bitcoin’s (BTC-USD) recent spike, many related equities remain far below previous highs. However, if crypto keeps climbing, massive gains may follow for crypto-adjacent companies.
Of course, corrections or downturns are likely as the highly-volatile crypto market ebbs and flows. However, several catalysts suggest tailwinds for crypto, including long-awaited optimism around a Bitcoin ETF and April’s halving event, which should bolster Bitcoin prices over the long-term. Moreover, expected rate cuts in 2024 could provide additional momentum for the sector.
Consequently, now is the time to identify stocks primed to deliver exponential returns amid the next crypto frenzy. I’ve got my eye on three in particular, so let’s dive in.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Riot Platforms (RIOT)
Source: rafapress / Shutterstock.com
Regarding pure-plays in the crypto mining space, Riot Platforms (NASDAQ:RIOT) remains my top pick for investors looking to ride the inevitable ups and downs of the crypto market. This company has systematically expanded its Bitcoin mining operations to capitalize on future bull runs. Most recently, its Bitcoin production climbed 21% month-over-month to 552 BTC in November.
Riot achieved this production with a network hash rate of just 12.4 EH/s. For context, the higher the hash rate, the more mining power Riot commands to unlock block rewards and transaction fees that are paid out in Bitcoin. So, as the company’s hash rate expands, so does its production.
Given these recent numbers, Riot is likely to see major capacity growth over time. In June, Riot penned a long-term purchase agreement with MicroBT for 33,280 next-gen Bitcoin miners, primarily destined for its Corsicana mining facility in Texas. Just this month, the company tacked on another 66,560 miners via a secondary MicroBT order.
These two deals will balloon Riot’s self-mining hash rate by 26 EH/s, with full deployment targeted by mid-2025. At that point, it will have a self-mining capacity nearing 38 EH/s. That’s a 3x increase from current levels. Thus, Riot benefits not only from rising Bitcoin prices, but also from expanding market share.
Even with Bitcoin languishing 40% below all-time highs, Riot’s current cost to mine 1 BTC stands at $5,537. As I write this, Bitcoin is trading above $42,000, providing a healthy buffer for Riot’s margins. Thus, profitability is likely even if crypto prices correct from here. Of course, if Bitcoin enters full-on bull market mode, the profit upside for Riot is massive.
Marathon Digital (MARA)
Source: Yev_1234 / Shutterstock
Marathon Digital (NASDAQ:MARA) represents another crypto mining play leveraged to Bitcoin’s long-term ascent. While Marathon’s cost to produce each Bitcoin comes in significantly higher than Riot’s at approximately $19,000 per coin, it’s difficult to ignore the growth Marathon has achieved in recent quarters.
Marathon mined 3,490 Bitcoins in Q3 2023, a 467% surge compared to 616 BTC in the year-ago quarter. It generated $64 million in net income on this revenue.
So, even with elevated mining costs factored in, Marathon remains healthily profitable. Given Bitcoin is hovering near the $42k threshold as we turn the page to 2024, I think this will remain the case next year. And with the company’s network hash rate continuing to grow, Marathon appears well-positioned to capitalize on the overall growth of crypto mining in North America.
HIVE Blockchain (HIVE)
Source: karnoff / Shutterstock
While the smallest of the trio, I view Hive Blockchain’s (NASDAQ:HIVE) laggard performance relative to Riot and Marathon as an opportunity amid the recent recovery. Hive’s expansion is no less impressive. As of its December update, the company produced 276 Bitcoin across mining facilities in Canada, Sweden, and Atlantic Canada in November.
Management noted that recently acquired Bitmain S19j Pro miners operate at an efficient 23 J/TH, so while HIVE’s cost to mine each Bitcoin comes in at approximately $22,600 (the highest amongst the three stocks profiled today) profitability isn’t a major concern with Bitcoin hovering at levels that are almost double the company’s cost.
With the crypto bear market now in the rearview mirror, Hive continues to acquire next-generation miners at discounted rates to bolster capacity ahead of Bitcoin’s next sustained leg higher. Hive’s cost per Bitcoin should moderate once this equipment comes online over the next 6-12 months.
The ultimate goal is maintaining cash flow breakeven production levels after this April’s impending Bitcoin halving event, before reaping outsized profits when crypto values accelerate. So, HIVE stock represents a higher-risk but potentially higher-reward play on the long-term crypto mining theme if Bitcoin booms, as many experts anticipate by 2025.
On the date of publication, Omor Ibne Ehsan did not have (either 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 the InvestorPlace.com Publishing Guidelines.
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.
More From InvestorPlace
Musk’s “Project Omega” May Be Set to Mint New Millionaires. Here’s How to Get In.
The #1 AI Investment Might Be This Company You’ve Never Heard Of
The Rich Use This Income Secret (NOT Dividends) Far More Than Regular Investors
The post 3 Stocks Primed to Deliver 10X Gains in a Crypto Bull Market appeared first on InvestorPlace.
