Investors should have a growing appreciation for the importance of blockchain stocks and the subsequent returns on investment that can come from them. I believe there are a few tailwinds to consider, prompting swift investor action before July 27. Former President Donald Trump is planning a campaign speech that day at the annual Bitcoin (BTC-USD) conference in Nashville, Tennessee, which could be a boon for many blockchain stocks.
Due to its ability to provide secure and transparent records, blockchain is essential in tracking and verifying transactions and assets in different sectors. For instance, blockchain was proposed in vaccine management to guarantee the correct distribution. It has also been proposed for other use cases, such as giving people immutable digital identities akin to a virtual ID card for people in the developing world.
Furthermore, global central banks are now exploring the possibility of creating their own digital currencies, known as CBDCs, using blockchain. These digital forms of fiat currency seek to be used as a convenient payment method. Currently, 86% of central banks have shown interest in CBDCs, and many are planning to launch pilot projects.
Therefore, time is of the essence for investors to take advantage of these blockchain stocks before Trump’s speech and buy them before their valuations inflate greatly. Here are seven blockchain stocks for investors to consider.
Coinbase (COIN)
Coinbase (NASDAQ:COIN) is the largest crypto exchange in the United States and, therefore, is in a good position to benefit from the long-term perspective of the growth of the adoption of cryptocurrencies, especially Bitcoin. As the cryptocurrency threatens to breach the $70,000 resistance level after a sweeping recovery, I recommend investors consider buying COIN stock before it’s too late. Coinbase is one of those blockchain stocks that I could greatly appreciate after Trump’s speech.
Also, Coinbase is trying to develop new sources of revenue and has not limited itself to transaction fees. The growth in the number of subscribers and the services seen on Coinbase, such as Coinbase Prime and Coinbase Custody, prove that Coinbase can generate revenue in a more stable and sustainable fashion. Coinbase is one of the companies that could be very profitable.
MicroStrategy (MSTR)
MicroStrategy (NASDAQ:MSTR) has become almost synonymous with Bitcoin, and thanks to the huge amount of the asset on its balance sheet, it sometimes follows a close correlation with it.
Trump has consistently supported Bitcoin. Therefore, when Trump gives his speech on July 27, I think that companies like MSTR that have large holdings of it will benefit greatly.
Therefore, MicroStrategy has carved itself out as an investment vehicle of choice for anyone who wants exposure to Bitcoin without the custody risk.
The element of MicroStrategy’s approach that I find most persuasive is its focus on acquiring more Bitcoin and, therefore, growing the BTC per share ratio. While other corporations might store BTC like they do cash, MicroStrategy adopted Bitcoin as part of its operational strategy and continues to buy more, thus effectively becoming the publicly traded BTC investment firm. This singular focus on Bitcoin also makes MicroStrategy quite different from most software industry companies.
I believe that companies like MSTR will eventually liquidate most, if not all, of their BTC and pivot into other lines of business, such as AI data centers (in the case of miners) or other high-margin businesses in the blockchain space. MSTR’s book value could then soar along with Bitcoin’s meteoric rise.
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) is a mining company that uses its energy-efficient ASIC miners to mine Bitcoin.
Trump has posted in the past that he wants all Bitcoin production to be in the U.S. This can only be good for RIOT amid the speech he is due to make at the rally.
Even though the company’s activities are tied to the price of Bitcoin, Riot has tried to stand out with its power management solutions. It can suppress power consumption during peak times on the Texas grid, which leads to the earning of credits and subsequently increases the company’s profitability. This approach to power optimization can give Riot potential protection against the fluctuation of Bitcoin’s price, as the company can use these energy credits to support its income from mining.
Due to the rising difficulty of mining new blocks and reducing block rewards, pivoting to other revenue streams is vital. If Bitcoin’s price doesn’t rise enough and fast enough, companies like RIOT will not break even. However, like with MSTR, Riot Platforms has a significant amount of Bitcoin on its balance sheet, at around $300 million. This could make the company a potential acquisition target or liquidate its Bitcoin to pivot into a related line of business.
Hive Blockchain (HIVE)
Hive Blockchain (NASDAQ:HIVE) has established itself as a strong and efficient Bitcoin mining company, especially since the recent halving of Bitcoin mining rewards.
Hive has been very strategic in acquiring modern and efficient mining hardware. This focus on operational excellence can be seen in the company’s capacity to retain its market share of the Bitcoin network’s total hash rate while global hash rates rose.
It has also been branching out its business from solely Bitcoin mining and actively exploring the high-performance computing (HPC) market. Though a relatively small earner in the company’s revenue stream today, this HPC segment offers Hive a chance to shift away from the risky Bitcoin market.
Thus, Hive’s operational efficiency and diversification strategies make the company ideally placed to face the challenges of the crypto mining sector. It’s also good to see that it is pivoting towards a more sustainable long-term earnings source.
CME Group (CME)
CME Group (NASDAQ:CME) remains one of the biggest derivatives marketplaces in the world, with a highly profitable and virtually unassailable business model. The company is positioned well because of its wide variety of futures, options, and other derivatives in cryptocurrencies, interest rates, equities, commodities, and foreign exchange.
CME’s bull case is similar to Coinbase, in that I expect the interest of derivatives to increase thanks to being a major marketplace.
CME Group has also shown great capacity in developing and diversifying products. It constantly introduces new futures and options contracts to meet market needs and expand its customer base. As interest in the crypto market heats up, I expect that more derivatives for Bitcoin and altcoins will be launched on CME in the future. This has been a part of CME’s strategy over the years, and it has made it remain one of the giants in the global exchange operating industry.
Also, CME Group’s operations are very efficient, and the company produces a good deal of free cash flows, which are distributed almost entirely to the shareholders in the form of regular and special dividends.
International Business Machines (IBM)
One intriguing sector of International Business Machines‘ (NYSE:IBM) business is its focus on blockchain technology. As one of the market frontrunners in this field, IBM offers state-of-the-art enterprise blockchain solutions and platforms with associated services to enable other companies to seize the opportunities of the new technology. Like with its other business segments, IBM seeks to onboard enterprise users.
IBM’s focus on blockchain technology is based on its open-source Hyperledger Fabric, developed and supported by IBM as part of the Linux Foundation’s Hyperledger project. Hyperledger Fabric is a private blockchain IoT solution that is highly scalable and suitable for enterprise applications, and IBM has done a great job in coming up with this solution.
Besides the Hyperledger Fabric, IBM also has a range of other services and consultations regarding blockchain to assist clients in initiating, constructing, and implementing blockchain solutions.
I think IBM is positioned well because the enterprise market for blockchain is still very new compared with the consumer side. Federated and private chains have not yet been adopted, although interest is there from a privacy and security standpoint. The rise of cybercrime and security requirements may help spur the adoption of blockchain in an enterprise setting.
Marathon Digital (MARA)
Marathon Digital (NASDAQ:MARA) is a blockchain stock worth considering, given the sophistication of its Bitcoin mining operation.
For instance, Marathon developed two-phase immersion cooling technology in-house. This new-age cooling system assists the company in harnessing more hash power from its ASIC miners than conventional cooling through airflow. Therefore, Marathon can enhance the hash rates and mining figures by accelerating the clocks of its rigs and freeing up airways.
Also, Marathon has its own mining pool, Mara Pool, which, of course, will be an advantage. This enables Marathon to get a larger percentage of the transaction fees. The company applies this intelligence to mine in the most efficient way and compete with other firms in the market.
In addition, Marathon has ventured into other areas of the cryptocurrency markets and has engaged in Kaspa (KAS-USD) mining. This diversification helps the company to reduce its dependence on Bitcoin, and at the same time, it allows Marathon to be part of new projects in the digital assets sphere.
These factors make MARA one of those blockchain stocks that investors can buy.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in BTC-USD.
