With the recent cooldown in crypto prices, it’s natural to wonder if the glory days are behind us. Far from it! I still believe blockchain technology and cryptocurrencies like Bitcoin (BTC-USD) have enormous disruptive potential that is just beginning to be tapped.
Are there risks? Of course. This is still an emerging, highly-speculative space. But the long-term upside these tokens provide makes them well worth the risk, for investors with a stomach for some volatility.
One of the best ways to gain exposure to this space is through blockchain stocks. Unlike cryptos themselves, these companies benefit from growing mainstream adoption and real-world use cases that are starting to scale globally. Yet, their share prices often move in sync with swings in the crypto market, giving you crypto-like returns potential without direct crypto ownership.
Of course, do your own due diligence before investing, as these stocks could experience gut-wrenching corrections if crypto sentiment sours again. That said, here are three to consider.
CleanSpark (CLSK)
CleanSpark (NASDAQ:CLSK) intrigues me as a differentiated Bitcoin mining company focused on utilizing renewable energy. The company derives 91% of energy from renewable sources (a rarity in this industry), positioning this stock well for future growth.
CleanSpark’s production doubled last year to 6,903 Bitcoin, while its revenue grew a solid 28%. However, the company also generated $137 million in losses against $168 million in revenue. I know some investors get spooked seeing this magnitude of losses, but we have to understand that mining outfits operate differently. CleanSpark strategically holds onto much of its mined Bitcoin. So, if prices appreciate substantially, the value of its assets and the company’s future earnings potential is much higher than its financials suggest. Right now, CleanSpark holds over 3,000 Bitcoin on its balance sheet.
As CEO Zach Bradford says: “Operationally, our hashrate growth year-over-year has been exceptional, highlighting our commitment to not just growing but also scaling efficiently. We achieved a remarkable milestone this year by surpassing a total hashrate of 10 exahashes per second, and that hashrate is among the most efficient in the industry.”
Case in point, CleanSpark recently signed a deal to purchase up to 160,000 new miners from Bitmain. That kind of growth, given its current renewable energy mix, gives me great confidence in CLSK stock despite short-term crypto volatility. This company is positioning itself perfectly for the upcoming Bitcoin halving event.
Iris Energy (IREN)
Moving down the market cap scale, Iris Energy (NASDAQ:IREN) intrigues me as an emerging Bitcoin miner uniquely leveraging renewable energy assets. This is a higher-risk, higher-reward play, but offers huge upside if Bitcoin prices reverse their bearish trend.
In 2023, Iris mined more than 4,123 Bitcoins from its specialized facilities in Canada, Texas, and the UK. Revenue scaled alongside production, even while Bitcoin prices came down from peak levels. Now, IREN stock has declined nearly 50% over the past month amidst the cooldown. However, this extreme downside volatility in its stock price also highlights why miners can outperform the price of Bitcoin itself on the way up.
Notably, Iris recently signed a letter of intent to purchase up to 5.3 EH/s of latest-generation Bitmain miners, plus options to acquire another 9.1 EH/s in H2 2024. That capacity boost will help Iris largely offset the impact of future halving events.
So, in effect, Iris seems poised to negate the negative effects of the upcoming halving (namely, reduced Bitcoin production) while benefiting broadly from any renewed breakout in Bitcoin or crypto prices. For risk-tolerant investors, I believe Iris Energy warrants a speculative position today for its 10X potential if conditions improve.
HIVE Blockchain Technologies (HIVE)
HIVE Blockchain (NASDAQ:HIVE) is my top Canadian crypto mining pick. In 2023, HIVE mined 3,260 Bitcoin even while network difficulty soared. The company achieved this through a mix of hashing capacity growth and importing cheaper power from Quebec and Atlantic Canada.
I particularly like how HIVE limits shareholder dilution compared to peers. The company’s share issuances spiked by only 5% last year. Plus, the company’s balance sheet remains solid, with ample liquidity to fund operations and serve its debt during this cycle.
Admittedly, HIVE’s $22,600 mining cost per Bitcoin seems high historically. But its ability to mine roughly 800 coins each quarter provides huge operating leverage if the halving and Fed policy move prices even higher above the company’s cost basis.
HIVE also continues to target double-digit hash growth in 2024 to capitalize on improving conditions. So, while this may certainly be a risky and volatile investment, HIVE stock appears to be well-positioned as a pick-and-shovel crypto play for when the tide turns once again in the crypto sector.
On the date of publication, Omor Ibne Ehsan did not hold (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.
