After touching all-time highs of $64,800, Bitcoin (CCC:BTC-USD) witnessed a sharp correction. It briefly traded below $30,000 before making a gradual recovery. However, the positive momentum seems to be gaining traction. Bitcoin is now trading near $50,000 levels. As this price rises, investors may see multi-fold returns in crypto-related Reddit penny stocks.
In the last rally for Bitcoin, Marathon Digital (NASDAQ:MARA) skyrocketed from lows of $1.48 to a high of $57.75. Similarly, Riot Blockchain (NASDAQ:RIOT) had a 52-week range of $2.35 and $79.50. I will not be surprised if more Reddit penny stocks skyrocket as Bitcoin surges.
It’s also important to discuss the reasons behind the renewed rally in Bitcoin. First and foremost, the adoption of cryptocurrencies is increasing at a stellar pace. Globally, the number of cryptocurrency users has doubled year to date to more than 200 million. Furthermore, it’s likely that Tesla (NASDAQ:TSLA) will again start accepting Bitcoin as a payment method.
Considering these bullish factors, let’s talk about seven Reddit penny stocks that are worth considering:
- HIVE Blockchain Technologies (NASDAQ:HVBT)
- Ebang International (NASDAQ:EBON)
- Mogo (NASDAQ:MOGO)
- Sphere 3D (NASDAQ:ANY)
- Bitfarms (NASDAQ:BITF)
- Tokens.com (OTCMKTS:SMURF)
- DeFi Technologies (OTCMKTS:DEFTF)
Penny Stocks: HIVE Blockchain Technologies (HVBT)
HVBT stock would be my top pick among Reddit penny stocks. The stock was recently up-listed on the NASDAQ exchange and trades at $2.95.
As an overview, Hive Blockchain mines Bitcoin and Ethereum (CCC:ETH-USD). For the third quarter of 2021, the company generated revenue of $13.7 million. During the period, the company mined 165 Bitcoin and 21,500 Ethereum.
Last month, Hive announced the purchase of 4,000 next generation miners. The company also noted that it has reached $200 million in annual run-rate. Therefore, HIVE stock is appealing with strong top-line and cash flow visibility.
Hive also seems to be diversifying beyond just mining operations. That’s another reason to be bullish on the stock. In April 2021, the company completed a share investment in DeFi Technologies. The latter is in the business of decentralized finance, which holds promise in the long-term.
Overall, with renewed bullish momentum in the cryptocurrency space, HVBT stock looks attractive. Once all miners are deployed, even stronger cash inflow is likely to serve as a catalyst for stock upside.
Ebang International (EBON)
It’s been a roller-coaster ride for EBON stock in the last 12 months. After touching all-time highs of $14.95, the stock has plunged to its current level around $2.40.
There are two reasons for the sharp downside. First and foremost, a short-seller report by Hindenburg Research impacted stock sentiments. However, in an open letter to shareholders, Ebang International refuted the claims.
Furthermore, the cryptocurrency mining ban in China also contributed to the correction. But the company believes it won’t have any immediate impact on its operations. A key reason is that Ebang has operations in North America and Europe.
I would take the company’s claims with a grain of salt. However, after the deep correction, some speculative exposure can be considered.
It’s also worth noting the company is in the business of Bitcoin mining machine production. With the cryptocurrency witnessing a renewed rally, orders for new mining machines are likely to remain robust.
For 2020, the company reported revenue growth of 82.57% to $19 million. The company has considerable experience with high-performance ASIC chips and mining machines. If strong growth sustains, EBON stock is likely to trend higher from oversold levels.
Penny Stocks: Mogo (MOGO)
MOGO stock has performed well over the past year, hovering around the $5 level. Even after a recent correction, the stock is higher by more than 200% in the last 12 months.
Mogo is a financial technology company that’s making significant inroads in the cryptocurrency space. Last month, the company announced a minority investment in Tetra Trust Company. The latter is Canada’s first regulated custodian for crypto assets.
Mogo also has a 39% stake in Canada’s cryptocurrency platform, Coinsquare. As cryptocurrency adoption increases globally, the company is positioned to benefit from this strategic investment.
It’s also worth noting that Mogo already has investments in Bitcoin and Ethereum. Currently, it wants to use 5% of its cash and investment portfolio to invest in cryptos.
The company also intends to launch a free stock trading platform by the end of 2021. It seems very likely that it will incorporate crypto exchanges going forward.
Mogo has ambitious growth plans. With some quality investments already under its belt, MOGO stock is worth considering.
For fiscal year 2022, the company is targeting revenue of $70 to $75 million. The company also has guided for EBITDA margin expansion. If growth gains traction in the next few quarters, it would not take much time for MOGO stock to double from current levels.
Sphere 3D (ANY)
ANY stock looks positioned for big upside. Year-to-date in 2021, it has already surged by 197%. However, there is still more juice left in this rally.
In June 2021, Sphere 3D announced a merger agreement with Gryphon Digital Mining. An interesting point to note is that Gryphon is focused on mining with 100% renewable energy. That’s a key differentiating factor compared to other Bitcoin mining companies.
In other recent news, Gryphon Digital announced the purchase of 7,200 S19J Pro Miners for $48 million from Bitmain. The latter company will deliver 600 miners monthly as of August 2021. Therefore, there is visibility for sustained growth in the number of Bitcoins mined over the next 12 months.
Sphere 3D has also signed an agreement with Hertford Advisors’ for exclusive rights to its crypto mining assets. According to Coindesk, the contract includes “the purchase of an additional 160,000 mining machines and securing a long-term contract for a 200,000-square-foot crypto mining facility.”
With these positive developments, Sphere 3D is positioned for healthy top-line growth once the merger is completed. ANY stock therefore looks interesting for further upside.
Penny Stocks: Bitfarms (BITF)
BITF stock has witnessed strong momentum with an upside of 144% in 2021. This does not come as a surprise with the company on a high-growth trajectory.
For Q2 2021, the company reported revenue growth of 398% to $36.7 million. For the same period, the company reported a healthy adjusted EBITDA margin of 65%.
It’s also worth noting that the best part of its growth story is still to come. Currently, the company has 69 megawatts (MW) of built-out capacity, making it one of the biggest mining operations in North America. Bitfarms expects capacity to increase to 168 MW in 2021 and then 210 MW in 2022.
From a financial perspective, the company reported cash of $36.2 million for Q2 2021. Including Bitcoin holdings, the company’s total liquidity buffer was $81.6 million. This provides ample financial flexibility to fund the expansion plan. Further, with Bitcoin trending higher, the balance sheet is likely to strengthen even more.
Another point worth mentioning is that for the first half of 2021, the company mined 1,357 Bitcoins. This was higher than both Marathon Digital and Riot Blockchain. Considering its growth plan, BITF stock looks undervalued on a relative basis. I would not be surprised if it quickly doubles from current levels.
Tokens.com is a very interesting name in the cryptocurrency space. It is a blockchain technology company involved in the “processing and validation services for various digital assets that power Decentralized Finance.”
It’s worth noting that decentralized finance is getting bigger with time. According to the company, the current value locked in the decentralized finance space is $56.3 billion.
Crypto staking is a key component in DeFi transactions. This is where Tokens.com comes in as a provider of crypto staking services.
To put things into perspective, the estimated staking pay-out in 2021 was $9 billion. This is expected to increase to $20 billion in 2022 and further to $40 billion by 2025. It goes without saying that as the world of decentralized finance gets bigger, the company is positioned to benefit.
The company’s business model is based around purchasing and staking tokens — both important elements of crypto transactions. At the same time, its digital tokens are also DeFi-focused.
It’s worth noting that the company is still at a nascent stage. If the business model does well and syncs with upside in cryptocurrencies, SMURF stock is positioned to deliver multi-fold returns.
Penny Stocks: DeFi Technologies (DEFTF)
Given the growth potential in the decentralized finance segment, DEFTF stock is another name that’s worth considering. In the last month, the stock has surged by more than 130%. The key reason is strong growth in the decentralized finance space coupled with renewed upside in Bitcoin.
As an overview, DeFi Technologies builds and manages assets in the decentralized finance segment.
In an important development, DeFi Technologies and Hive Blockchain have entered into a strategic partnership. The objective of the partnership is “testing and implementing Miner Extractable Value technology (MEV), inherent to the DeFi ecosystem for transaction processing.”
MEV is “the amount of profit miners can extract from reordering and censoring transactions on the blockchain.” In a growing cryptocurrency and DeFi space, MEV can be a game-changer.
Another interesting division of the company is DeFi Venture. The latter takes positions through private placement in DeFi protocols. The portfolio was up 300% as of July 2021. With the current bull market in altcoins, it is positioned for further gains.
Overall, DEFTF stock is another attractive name to consider for exposure to the high-growth segment of decentralized finance.
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On the date of publication, Faisal Humayun held a long position in HVBT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.