Cryptocurrencies are booming as we turn the calendar over into 2021. Three of the four largest cryptocurrency tokens posted massive gains last year, driving the industry’s total market value to $860 billion on January 4, according to data from Coinmarketcap.com. The once-reviled asset class is gaining respect and interest from governments and financial giants around the world.
If you haven’t added a handful of leading cryptocurrency names to your portfolio yet, this would be a great time to dip your toes into the waters of crypto tokens such as bitcoin and Ethereum. At the very least, you should absolutely become familiar with the cryptocurrency market. And you can do it all without buying any of the tokens.
Let me show you a couple of different paths you can take toward entering the cryptocurrency market, with just a quick stop on Wall Street. How spicy do you want your crypto investments?
Some tickers with close ties to the cryptocurrency industry left the actual crypto tokens in the dust last year. Next to the incredible gains in Bit Digital (NASDAQ:BTBT), Riot Blockchain (NASDAQ:RIOT), and Marathon Patent Group, bitcoin’s 308% return looks like a forgettable rounding error:
These companies are direct bets on the machinery behind the scenes.
- Bit Digital started a global bitcoin mining network in early 2020, adding thousands of specialized mining computers throughout the year.
- Riot Blockchain started buying bitcoin and Ethereum miners in 2017 with a geographical focus on mining facilities across North America.
- Marathon Patent Group used to manage intellectual property assets with the intention to reach licensing deals or to enforce its patent claims in the courtroom. That business model turned out to be unprofitable in the long run, so the company acquired a smaller cryptocurrency mining company in 2017. These days, the company runs two bitcoin mining centers in Montana and North Dakota.
These companies may be able to outgrow the bitcoin and Ethereum tokens by adding more mining capacity and optimizing their networks along the way. The potential for long-term growth here is absolutely stupendous, assuming that the companies play their cards right.
That being said, mining specialists also magnify the potential risks for investors. The market caps of these three stocks have passed the $500 million mark and Riot Blockchain sits a stone’s throw away from the billion-dollar mark. They are not yet profitable and their annual top-line revenues range from Marathon’s $2 million to $13 million for Bit Digital.
There is room for fabulous growth here, assuming that cryptocurrency prices continue to rise. The stocks are also valued for absolute perfection. Another sharp correction in bitcoin and Litecoin prices could be catastrophic for these companies. Rising energy prices would also hamper their climb toward positive bottom-line profits, and each company’s strategic decisions along the way could…