According to crypto experts, the ongoing bear market has come to an end after almost two years. Bitcoin (BTCUSD) prices have more than doubled year-to-date, while Ethereum (ETHUSD) has surged close to 70% in 2023. Moreover, two key near-term drivers could drive cryptocurrency prices higher in the next 12 months.
First is the Bitcoin halving event, which is expected to take place in April 2024. The total number of Bitcoin that can be mined is limited to 21 million, and the halving process reduces the rewards for mining - which is intended to control the supply of cryptocurrency on the market and limit inflation. The halving typically acts as a positive catalyst for Bitcoin. For instance, between November 2015 and November 2017, BTC prices surged by 2,000%, while they spiked almost 600% between November 2019 and November 2021.
Another significant event for cryptocurrencies could be the upcoming launch of multiple spot Bitcoin exchanged traded funds (ETFs). Several investment managers, including BlackRock (BLK) and Invesco (IVZ), have applied to introduce their own version of a spot Bitcoin ETF, which seems increasingly likely to be approved by the SEC in the next six months. BlackRock has close to $10 trillion in assets under management, and even if it allocates 1% of funds toward Bitcoin, it could result in inflows worth $100 billion.
It seems the time is ripe to invest in Bitcoin and related crypto assets right now. While you can purchase BTC and other cryptocurrencies directly from exchanges like Coinbase (COIN), another way to gain exposure to this area of the market is by investing in BTC mining companies. Here are three crypto stocks to consider buying before the 2024 Bitcoin halving event.
TeraWulf Stock
Valued at $222 million by market cap, TeraWulf (WULF) develops, owns, and operates Bitcoin mining facility sites in New York and Pennsylvania. In Q3 of 2023, TeraWulf self-mined 611 BTC and realized another 13 BTC via hosting profit share. Its revenue rose to $19 million in Q3, up from $15.5 million in the year-ago period.
The total value of the self-mined Bitcoin stood at $27.9 million, while the power cost per Bitcoin rose 29% to $9,322 due to a 13% increase in network difficulty. TeraWulf reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $9 million, an increase of 19% year over year.
Out of the five analysts tracking WULF, four recommend “strong buy,” and one recommends “moderate buy.” The average target price for WULF is $3.65, which is 244% above the current trading price.
Hive Digital Technologies Stock
Hive Digital Technologies (HIVE) is another Bitcoin mining company, valued at $249 million by market cap. HIVE reported revenue of $22.8 million in Q3 and mined 801 BTC. Its gross operating profit stood at $4.6 million, indicating a margin of 20%.
The number of BTC mined during the quarter fell by 6.6% year over year. Similar to TeraWulf, HIVE's revenue was impacted by increased mining network difficulty, which means more miners were competing with better equipment for the opportunity to mine the maximum number of Bitcoin. HIVE recently purchased 4,800 Bitmain S19k Pro ASIC miners, allowing it to upgrade a portion of its fleet to improve mining efficiency.
Out of the three analysts tracking HIVE, two recommend “strong buy,” and one recommends “moderate buy.” The average target price for HIVE is $6.83, which is 127% above the current trading price.
Riot Blockchain Stock
The final Bitcoin mining stock on my list is Riot Blockchain (RIOT), valued at $2 billion by market cap. Among the largest BTC mining companies in the world, Riot reported revenue of $51.9 million in Q3, as it mined 1,106 Bitcoin during the quarter.
The company has mined a total of 4,996 BTC in 2023 with an average cost of just $5,537 per Bitcoin, which indicates Riot is a leading low-cost producer of the digital asset. Riot ended Q3 with $290 million in cash and 7,327 BTC worth $500 million, providing it with the liquidity to ride out an uncertain macro environment.
Out of the eight analysts tracking RIOT, six recommend “strong buy,” one recommends “moderate buy,” and one recommends “strong sell.” The average target price for RIOT is $16.78, which is 65% above the current trading price.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
