Crypto/Blockchain-technology Stocks to Watch in 2023
This lengthy crypto bear market has impacted the vast majority of digital assets and many companies in the sector.
Yet, I see a silver lining to all of this. Significant drops in the space present unique buying opportunities for not just crypto assets (i.e., reputable ones with long-term potential) but also many publicly-listed companies, particularly those that mine crypto, regulated exchanges and those investing in distributed ledger technology (DLT).
Today, I will provide a shortlist of some entities that could bounce back and surpass their previous all-time highs (ATHs).
Of course, none of this is financial advice, and many factors could thwart a potential recovery, so please do your due diligence before investing.
Despite an average start, the stock has been declining since January 2022. However, in all fairness, this is predominantly due to the entire crypto market losing 70%-80% of its value on average in the last 12 months and does not represent failures on Coinbase’s part.
Sharply rising interest rates, inflation, fears of a looming recession worldwide, and various crypto controversies in 2022 have all been major catalysts for this market-wide collapse.
I have encountered several crypto ‘puritans’ that dislike Coinbase, mainly owing to their tendency to appease regulators readily (at least relatively speaking, versus other exchanges), and have historically been slow to expand their range of crypto assets for buying, selling, trading, etc.
However, the (disappointing?) reality is that many exchanges must abide by specific regulations to operate legally, notably concerning Know Your Customer and Anti-money Laundering (KYC AML) laws across multiple countries.
This Bitcoin mining company stands out from many others by emphasising a combination of various clean-energy sources and carbon offsets to ensure carbon-neutral BTC mining whilst building a system that is also financially viable.
I appreciate their rational approach to including multiple sources of clean energy, including nuclear power (a contentious topic, I know, though you only need to look at France’s energy mix and falling CO2 emissions to see the benefits of nuclear power when well-managed).
In tandem with their use of renewables, this has massive potential to ensure a low carbon footprint of Bitcoin mining, something I have discussed in a separate article focusing on this matter.
Whilst it will be difficult for several BTC miners, primarily due to the abovementioned matters, I see CleanSpark getting through this challenging period. Some positive signs to date include:
– A three-fold increase in its mining hash rate in 2022, reaching its target of 6 EH/s a couple of weeks ago.
I will acknowledge that there is a risk that Bitcoin’s price will remain subdued for a while (months, possibly even years). Following the upcoming (2024) Bitcoin Block Reward Halving, these relatively low BTC prices will add further pressure to margins for CleanSpark, let alone all Bitcoin miners.
An increasing hash rate will only lead to greater energy demands moving forward. Thus, whoever manages to utilise an energy-efficient yet economically-viable and reliable power source will reap the most significant rewards, something that is imperative during a bear market when margins are very tight.
Moreover, it must carefully monitor its financials and reverse some recent trends to achieve consistent profitability. I implore you to do the same when assessing this company.
I first came across CLSK in this Yahoo Finance piece.
Betashares Crypto Innovators ETF (ASX: CRYP)
Headquartered in Sydney, Australia, Betashares offers various funds to help investors gain exposure to different sectors with solid growth potential.
Focusing on crypto, I recommend this fund as they invest in up to 50 leading crypto/blockchain-tech companies, including some that feature in this piece.
Considering that this asset class is highly volatile and that single stocks are riskier than index funds and ETFs, this could be more appealing to those seeking to mitigate risk in their portfolio.
As I am based in Australia, I am more familiar with a local option than alternatives in North America, Europe and elsewhere. Hence, I recommend seeking a suitable and trustworthy crypto ETF (equivalent) within your jurisdiction.
More information on this fund is here.
This Aussie-based company has been in the space for several years, starting in 2014 as a Bitcoin mining company, but has (since 2019) shifted its focus to managing digital assets for institutional investors and producing blockchain-based products for financial markets.
It is the first Australian company to offer regulated Bitcoin and Digital Asset funds.
Wildcard — MicroStrategy Incorporated (NASDAQ:MSTR)
Spearheaded by Bitcoin maximalist Michael Saylor, MicroStrategy specialises in business intelligence, product innovation and multiple sectors since its public launch in 1989.
Saylor has decades of experience running various businesses alongside his non-profit education organisation.
He has never shied away from controversy; he is a polarising figure, to say the least, notably in recent years with this steadfast support of Bitcoin.
I agree with his opinions about the merits of Bitcoin, particularly in terms of having a digital asset and store of value with a steady supply (and inflation) that can be readily exchanged with other assets, allows owners to have complete control over their assets (i.e., via non-custodial wallets) devoid of government intervention.
Despite MicroStrategy’s focus on other areas besides DLT, its support of Bitcoin, a truly decentralised blockchain, is worthy of mention.
I have featured this as a wildcard as, whilst I believe it will do well in future, particularly with Saylor’s experience and business acumen to date, it, in addition to other companies in the crypto/DLT realm, has struggled over the past 12–15 months, down by roughly 80% since November 2021.
Some of you might find it counterintuitive of me to suggest Bitcoin/crypto mining stocks here, despite more turmoil forecast for this space looking ahead in 2023.
I get it, and I would go in with the same reluctance. There is a reason why I titled this article , and not necessarily buy (although, yes, I have small amounts of each).
One only has to look at Core Scientific, on the cusp of collapsing until a bailout at the eleventh hour.
More companies will only be able to handle 2023 if there happens to be a swift turnaround in the entire crypto market and Bitcoin manages to get (and remain) above $20,000 per BTC once again.
Miners, whether individuals or firms with mid-to-large ASIC mining rigs, need to conduct a cost-benefit analysis to ascertain what is profitable. Various BTC mining calculators are a start, thinking of the former.
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I have opted for a variety in this list: One includes a reputable and well-established US-based exchange, and another is involved in developing and promoting blockchain-based solutions alongside your Bitcoin mining operations.
Low prices of major crypto stocks such as Coinbase (COIN) and MicroStrategy (MSTR) would give people a compelling argument to put some money in now and see what happens. The enticing part is that these stock prices are down by more than 90% from their respective ATHs. Thus, a small amount one can readily afford to lose goes much further than it did 12–15 months ago.
In summary, a vast swathe of shares, ETFs, index funds and the like help boost exposure for various laypeople that would prefer to avoid being directly exposed to crypto assets. Furthermore, I envisage that there will be companies in the future (realistically in at least 8–10 years) that will flourish more off DLT than a given crypto or protocol.
I welcome any reputable option that helps boost innovation, particularly if it is helping promote DLT, regardless of whether it involves direct crypto exposure.
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None of this is financial advice, and I am not a financial advisor. This piece contains news and opinions from either myself or the sources mentioned here. Please do enough research before investing in any crypto assets, NFTs and any product that is associated with this space. If you enjoyed this article, I recommend following my Medium page for regular reports about crypto assets, blockchain technology and more.
Originally published at https://cryptowithlorenzo.substack.com on January 5, 2023.