It’s easy to find penny crypto stocks to buy, but deciding which ones can be a challenge.
Another potentially big crypto bull market is underway and has been led by Bitcoin (BTC-USD) surging higher by 75% for year-to-date 2023.
Of course, this is just the beginning. Standard Chartered believes that Bitcoin is likely to touch $100,000 by the end of 2024. If these estimate holds true, some of the best crypto stocks are poised for a massive rally.
I believe that there are two primary catalysts for a sustained rally in crypto. First, the fed is likely to have a dovish policy stance on fears of a recession. A weak dollar will trigger a rally in all risky assets. Bitcoin halving is due in 2024. Going by historical records, the having event is followed by the meaningful rally.
Besides exposure to some good crypto projects, investors can consider these penny crypto stocks to buy for healthy returns.
| BITF | Bitfarms | $1.08 |
| HIVE | Hive Blockchain | $3.03 |
| BTBT | Bit Digital | $2.25 |
Bitfarms (BITF)
Bitfarms (NASDAQ:BITF) stock seems to be the most exciting name among penny crypto stocks to buy.
BITF stock trades at $1.1 and 10x returns are likely in a scenario of Bitcoin trading at $100,000.
As an overview, Bitfarms is a Bitcoin miner and the company has been growing at a healthy pace. As of April, Bitfarms reported mining capacity of 5EH/s, which was higher by 52% on a year-on-year basis. As mining capacity expands, digital assets are likely to swell.
Bitfarms is also attractive because the company is a low-cost miner. Last year, Bitfarms reported an average direct cost of $10,000 per Bitcoin. EBITDA margin improvement in 2023 and beyond is likely to be significant.
There is a case for robust free cash flows in a scenario of Bitcoin trading near previous highs.
Between June 2022 and February, Bitfarms has managed to reduce debt by 86% to $23 million. With strong credit metrics, the BITF stock deserves better valuations.
Hive Blockchain (HIVE)
Hive Blockchain (NASDAQ:HIVE) stock has surged higher by 97% for year-to-date 2023. However, HIVE stock remains attractively valued and looks poised to remain in an uptrend.
Hive Blockchain is another crypto miner with attractive cost metrics. For Q3 2023, the company reported revenue and EBITDA of $14.3 million and $1.5 million respectively.
For the same period, the company’s cost of Bitcoin produced was $13,634. Clearly, Hive is positioned for healthy EBITDA margin expansion with the big rally in Bitcoin.
Another point to note is that Hive held 2,284 Bitcoin as of April. This provides the company with ample financial flexibility. Additionally, as Bitcoin trends higher, the value of digital assets in the balance sheet will rise. This will take HIVE stock higher.
It’s also worth mentioning that Hive plans to offer high performance computing to companies in the gaming, artificial intelligence and graphics rendering industries. This is another potential growth catalyst in the next few years.
Bit Digital (BTBT)
Among the penny crypto stocks discussed, Bit Digital (NASDAQ:BTBT) stock has outperformed with year-to-date returns of 219%.
With several business positives, I believe that BTBT stock will remain in an uptrend.
The first point to note is that Bit Digital had a total liquidity buffer of $70 million as of March 2023. Further, the company had no debt in its balance sheet. With strong financial flexibility, the company is positioned to aggressively expand and benefit from the bull market.
A differentiating factor for Bit Digital is the fact that the company has forayed into Ethereum (ETH-USD) staking. I see several advantages. First, it allows for diversification of digital assets in the balance sheet. Further, staking income will add to the revenue. It goes without saying that Ethereum is a blue-chip asset and as its value swells, Bit Digital will benefit.
At the same time, Bit Digital is expanding its Bitcoin mining capacity. The company recently announced an agreement for 10 megawatts of incremental hosting capacity to power its miners. A total of 3,100 miners are expected to be delivered between April and July.
On the date of publication, Faisal Humayun 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.
