|Ticker||Company||Description||Net Asset Value* (crypto or $)||Pros||Cons|
|HIVE||HIVE Blockchain||A Bitcoin and Ether mining company||US $161.7 million||Mines both BTC and ETH||Faces immense competitive pressure|
|HUT||Hut8 Mining||A Bitcoin mining company||US $210 million||Undervalued stock||Faces immense competitive pressure|
|BNXA||Banxa Holdings||A fiat-to-crypto payment processor||US $5.4 million||Revenue determined by crypto trading volume||Micro-cap stock|
|COIN||Coinbase Inc.||Crypto trading platform||US $326 million||One of the largest crypto trading platforms in the industry||Faces immense competitive pressure|
|VOYG||Voyager Digital||Crypto trading platform||NA||Listed in Canada||Smaller than rival trading platforms|
|MSTR||MicroStrategy||Software company with large BTC holdings||US $5.2 billion||Largest corporate holder of BTC||Not a crypto company or service provider|
*Net Asset Value as of April 2022
Vancouver-based HIVE Blockchain Technologies (TSXV:HIVE) (NASDAQ:HVBT) is a unique target for crypto investors.
That’s because it’s one of the few multi-currency miners on the market.
The company primarily mines Bitcoin, but it also has Ether mining operations.
The firm’s mining facilities are spread across the world.
However, they’re primarily based in countries with stable governments, predictable regulations and access to clean energy.
Canada is the primary mining destination, but HIVE also has facilities in Sweden and Iceland.
Altogether, the company has 5.4 Terahash in Ether and 2.2 Exahash in Bitcoin mining capacity.
Hive is also one of the few cryptocurrency miners with multiple digital assets on their balance sheet and completely renewable mining operations.
Its balance sheet is also a mix of Ether and Bitcoin and was worth $159 million at the start of the year.
Additionally, 100% of its operations are powered by wind, solar, geothermal or hydroelectric sources.
At the time of writing, HIVE’s portfolio of digital assets may have lost some value since Bitcoin and Ether have both declined this year.
That decline is somewhat offset by the additional crypto that has been mined in recent months.
Altogether, I believe it is fair to assume the company has at least $100 million in digital assets on its balance sheet while the company’s market capitalization is $916 million.
A market cap-to-book value ratio of 9.2 seems low for a company with double-digit gross profit margins and triple-digit annual growth.
Hut 8 Mining (TSX:HUT) (NASDAQ:HUT) is another crypto mining stock that should be on your radar.
The Toronto-based company held a total of 5,518 BTC on its balance sheet at the end of 2021.
That collection of digital assets is worth $281 million at the market price at the time of writing.
Meanwhile, the company’s market cap is just shy of $975 million.
Put simply, Hut 8 has more assets than HIVE, but is trading at roughly the same market value.
Hut 8 stock is trading at a price-to-book value of digital assets ratio of 3.46.
That could imply an undervaluation, which is why long-term growth investors should watch this stock closely.
Banxa Holdings (TSXV:BNXA) offers a unique service for crypto companies across the world – regulatory technology or RegTech.
Essentially, the company handles all the compliance requirements in different jurisdictions to allow crypto companies an on-ramp for their customers.
In other words, it makes it easy for a crypto exchange or wallet service to convert fiat currencies into digital assets.
Banxa’s platform has been integrated with industry giants such as Trezor, Ledger, Binance, Bancor, Changelly, Huobi and ShapeShift.
These tech giants can accept payments from debit or credit cards and local bank transfers (such as Interac eTransfers) via Banxa’s platform.
Over the years the company has helped clear transactions collectively worth over $1 billion. Transaction volume was up 700% year-over year in 2021.
Banxa stock has lost roughly two-thirds of its value since last year and the company is worth just $117 million at the time of writing.
Investors may be underestimating the company’s value proposition, which is why this stock could be an ideal target for a contrarian investor.
Voyager Digital (TSX:VOYG) is another crypto service provider.
The company offers a crypto trading app that rivals Wealthsimple and Robinhood.
Users have access to over 100 digital currencies that can be traded commission-free on the platform.
Users can also stake or lend their crypto assets for high-yield returns.
According to the Voyager website, rewards for crypto assets could be as high as 12%.
Voyager stock has declined substantially along with the rest of the crypto market.
The stock is worth 75% less than it was in November 2021.
That’s because retail trading volumes have likely dissipated.
But if there’s another crypto boom indicating a bull market ahead, Voyager could be one of the primary beneficiaries.
That’s why this stock deserves a spot on your watch list.
One of the world’s largest cryptocurrency exchanges certainly deserves a spot on this list.
Coinbase Global Inc.
(NASDAQ:COIN) has had a tough first year as a publicly-traded company.
The stock has dropped 56.9% since its IPO in April last year.
Now it trades at just 10 times earnings per share and 4.3 times price to sales.
Sales could drop in the months ahead if the cryptocurrency market remains subdued.
The company’s ongoing struggles to expand in new regions, such as India, are also putting downward pressure on the top line.
However, Coinbase could be poised for immense growth in the long run if it can maintain its lead in this critical segment of the digital assets space.
Long-term growth investors should certainly keep an eye on it.
Perhaps the most meme-worthy stock on this list is MicroStrategy Inc.(NASDAQ:MSTR).
You may not have heard of the company but you’ve certainly heard of its founder Micahel Saylor.
Saylor has been accumulating Bitcoin on the company’s balance sheet for years and is now considered the community’s top evangelist.
Saylor has accumulated so much that the company’s Bitcoin collection is worth more than the company itself.
MicroStrategy currently has 129,218 BTC on the books, which is worth $5.18 billion.
Meanwhile, MSTR’s market cap is just shy of $5.07 billion.
In other words, buying the stock is as good as buying BTC but you get a legacy software company thrown in for free.
MicroStrategy is the largest corporate holder (or Hodler) of BTC right now, which could make it an ideal bet for investors looking for crypto exposure on the stock market.
Key Considerations When Investing in Crypto Stocks
Crypto Stocks Can be Held in Registered Accounts: Cryptocurrencies such as Bitcoin and Ether cannot be held in government-registered accounts such as the Tax-Free Savings Account (TFSA) or the Registered Retirement Savings Plan (RRSP).
However, most of the stocks mentioned on this list, as well as, crypto exchange-traded funds can be held in these accounts.
That should allow you to mitigate the taxes on capital gains from crypto.
Stocks Add Another Layer of Risk: Cryptocurrencies are inherently risky.
However, corporations that provide services to this sector add another layer of risk.
The company’s margins, liabilities, borrowing cost and regulatory oversight are all factors that must be considered when investing in these crypto stocks.
Even crypto ETFs have additional risk factors such as the cybersecurity of their custodial services and the management fees on their units.
The Value of Digital Assets is Unpredictable: Some of the companies on this list have immensely valuable digital asset portfolios.
In fact, in some cases, the underlying BTC is worth more than the company itself.
However, the market value of digital assets is volatile and notoriously unpredictable.
Bitcoin has suffered double-digit drawdowns in the past and there’s a good chance it could see severe dips in the future.
Investing in a stock simply because of the value of its underlying digital assets is quite risky.
Frequently Asked Questions
- Can you purchase crypto stocks in Canada?
Canada is one of the few countries that has embraced blockchain technology. There are several cryptocurrency service providers listed on the Toronto Stock Exchange. In fact, some of the world’s first crypto exchange-traded funds or ETFs were launched on the TSX. That means average Canadian investors can certainly buy and hold crypto stocks in their portfolio.
- Are crypto stocks a good alternative to buying coins directly?
There’s no straightforward answer to this. Some stocks are trading at a discount to their digital asset value and could amplify returns over time through financial leverage. However, corporations also add several risk factors that must be considered. Whether or not a specific company’s stock is better than buying the company’s underlying BTC holdings depends on your investment style and objectives.