Investing in blockchain stocks can be a great way to add a growth dimension to your portfolio. Next year’s cryptocurrency rally with a speculated Bitcoin (BTC-USD) ETF in the cards and the halving event could end up being explosive.
A great thing about blockchain stocks is they may expose investors to this rally without holding Bitcoin directly. That absolves investors of the significant custody risks and technical hurdles that may hinder people from participating in the crypto market’s projected rise.
Another advantage is that blockchain stocks may amplify investor gains and losses by owning shares in these companies. There are higher and different risks to holding shares in these brands than owning cryptocurrencies. However, those risks come with a complementary upside.
So, if you are on the hunt for some blockchain stocks to add to your portfolio, here are some of the best companies innovating in the space for 2024.
CleanSpark (NASDAQ:CLSK) is a Bitcoin mining company in Nevada. This company takes a different approach to mining than some of its peers, seeking to mine the coin using environmentally friendly methods.
I feel that CLSK’s approach to mining gives it a significant competitive advantage. There has long been a sharp criticism of Bitcoin by its detractors due to its energy use. It was reported at the start of the year that mining the coin consumes as much energy as the country of Norway. Bitcoin evangelists cite the energy use as a by-product of its Proof-of-Work consensus mechanism and is what makes it secure in the first place — a fair point. But policymakers and the wider public don’t necessarily see it the same way.
Bitcoin’s energy use is expected to increase over time in proportion to block difficulty and hash rate. The peak energy usage of the Bitcoin network won’t be considered pretty for those who are concerned about reducing carbon emissions.
CLSK is doing its part to reduce emissions through renewable energy and other technology solutions to ensure its carbon footprint is as small as possible. That, in turn, may attract more capital inflows from institutions seeking a cleaner and more ethical way for investors to get exposure to the crypto market. That makes it one of the blockchain stocks investors should keep an eye on as a possible investment.
Bitfarms (NASDAQ:BITF) is a Canadian company also involved in mining cryptocurrencies. Like CLSK, it also uses renewable and green energy solutions, including hydroelectric power, to help power its mining operations, which power 100% of its operations in Quebec.
What stands out to me about BITF stock is its highly successful operations expansion and consistent mining hash rate growth. The technological prowess in achieving that makes it one of the most innovative blockchain stocks. It expects to develop operating capacity to 290 MW by Q1 2024.
BITF stock also boasts some impressive financials. For instance, in Q3 2023, the company reported revenue of $35 million and an adjusted EBITDA of $7 million. It also substantially grew the number of Bitcoins on its balance sheet in the same quarter, from 154 to 703 coins.
Another bonus of investing in BITF is its cheap valuation, as it trades at just five times forward sales.
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) is still one of my favorite blockchain stocks, despite missing analyst estimates for the last four quarters.
In my opinion, RIOT is one of the most technologically proficient companies in the cryptocurrency mining industry. That comes from its extremely advanced miners and it’s edge in the hash rate war with other large mining firms.
For instance, this month, it ordered 66,560 cutting-edge miners, which may increase its mining capacity to a huge 93 exahashes per second. The greater the hash rate, the more powerful its mining operations are, and the more Bitcoin rewards blockchain stocks like RIOT can earn.
Not only are these miners powerful, but they are also very efficient at converting the use of energy into hashes. The ordered M66S model achieves 18.5 Joules per terahash. These miners should deploy over the next few years.
Management appeared bullish on the miner acquisition, describing them as giving it the ability to now “own and operate one of the largest and most efficient Bitcoin mining fleets in the world.”
That makes RIOT one of the leaders in the blockchain space and a name that investors should consider.
On the date of publication, Matthew Farley did not hold (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.