There are many trends that the best blockchain stocks can take advantage of. Among the most important trends, one can note the expansion of Decentralized Finance (DeFi). DeFi is the removal of central authorities and go-betweens in order to allow direct and trustless transactions between parties. It has allowed one to coin the term “be your own bank,” as traditional financial intermediaries are replaced by smart contract technologies.
Further, the introduction of Central Bank Digital Currencies (CBDCs) is a revolutionary concept that could replace the idea of fiat currency as we know it. More countries are the digital currencies for their respective nations, which is designed to improve security and usability of funds.
The value and disruptiveness of these trends is immense. Therefore, one should consider the best blockchain stocks to take advantage of them. I’ve put together a list of three blockchain stocks that I think will be able to ride these trends and others to the conclusion of their market adoption.
Coinbase (COIN)
Coinbase (NASDAQ:COIN) has managed to do a very good job at expanding its business beyond the revenue from transaction fees. Furthermore, the company’s subscription and blockchain reward businesses have been expanding well to diversify away from the cyclical nature of its exchange business.
The possibility of a more favorable regulatory environment with regard to cryptocurrencies like Bitcoin (BTC-USD) under a Trump administration will also be beneficial for the company in the future. Regardless of who wins in November, I think that regulators and politicians are slowly warming up to these kinds of digital assets, which will only be good for Bitcoin bulls in the future.
As COIN operates the largest crypto exchanges in the U.S., I believe that it will be a key beneficiary of these crypto-friendly policies, which then makes it one of those blockchain stocks that investors should keep on their radars.
Riot Platforms (RIOT)
The bull argument for Riot Platforms (NASDAQ:RIOT) can be based on the company’s operational efficiencies and potential to benefit from the rising role and value of cryptocurrencies in the future.
The fact that Riot buys power curtailment credits from the ERCOT grid during peak hours is advantageous in controlling the company’s mining costs. This approach to power utilization, together with the company’s large cash position and minimal debt, allows for its management of short-term operational challenges.
I’ll restate what I said before about Bitcoin mining companies like Riot Platforms: Bitcoin is not the end goal, but rather mining is a stepping stone towards something greater. Companies like Riot are amassing a huge number of Bitcoins on their balance sheets that could allow them to pivot to related business operations in the future, such as in AI data centers. If Bitcoin appreciates in value considerably, companies like Riot may see a large boost to their book value per share, along with giving them a substantial amount of liquidity for further operations.
MicroStrategy (MSTR)
MicroStrategy’s (NASDAQ:MSTR) software business has been a problem child, and the firm has indeed pivoted its attention towards capitalizing on its status as one of the biggest corporate Bitcoin holders. This is particularly important as more and more companies are going for Bitcoin treasuries, and MicroStrategy has been and can be considered the most famous brand in this regard within the crypto sphere.
MicroStrategy has recently enhanced its pro-Bitcoin stance through the introduction of the “BTC Yield” metric, which measures the growth in Bitcoin holdings per share. The company uses convertible debt financing to buy Bitcoin at low interest rates. MSTR expects a 4-8% annual BTC yield growth moving forward.
MSTR has around 226,500 Bitcoin on its balance sheet, with an average cost of around $35,000 per Bitcoin. This then makes it one of the largest and most efficient holders of the assets, and could be one of the best Bitcoin treasury stocks that investors can eye up as a potential investment.
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 did not have (either directly or indirectly) any positions in the securities mentioned in this article.