The time to look into crypto-related stocks has arrived as Bitcoin (BTC-USD) has reached new highs recently, again. According to analysts who remain optimistic about its prospects, BTC could reach $88,000 this year, with more bullish analysts forecasting $100,000 by next year. However, while the premier cryptocurrency has been trending higher lately, these moves have been somewhat volatile, and perhaps this can transpire into crypto-related stocks.
Many analysts cite the growth in Bitcoin exchange-traded funds (ETFs) as the primary driver of the recent price action. Inflows into ETFs have set new records, and there are no signs of slowing. Further interest rate cuts by the Fed could also boost risk appetite and support higher bitcoin prices. In turn, some crypto-related stocks may be due to a rise.
With Bitcoin dubbed “digital gold,” higher BTC prices could lift crypto-related stocks of Bitcoin miners. As Bitcoin hits new highs, average daily mining revenues increase. Unlike gold, some crypto-related companies hold Bitcoin reserves directly. Therefore, several crypto-related stocks across sectors may see an upside in the coming months, courtesy of Bitcoin’s rise.
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) is the first of the crypto-related stocks to cover. The Bitcoin miner is understood to have the lowest production cost in the industry. As such, it has the highest margins for Bitcoin. Any increase in the price of BTC boosts the company’s bottom line. The crypto-related company recently reported a record hashrate and a 19% BTC production quarter-over-quarter (QOQ).
Analysts appear optimistic about the crypto-related stock, forecasting its price will double at an average target price of $20.00 per share. Notably, RIOT’s EPS is currently sitting at 0.28. However, most analysts estimate EPS to turn positive to 0.38 in 2025. The recent partnership with Reformed Energy to generate energy from landfill waste and power their mining operations may be one of the catalysts for the milestone.
Marathon Digital (MARA)
The crypto-related company Marathon Digital (NASDAQ:MARA) is considered the “largest” Bitcoin miner in part because it retains mined BTC. Other miners, such as Riot, sell their BTC to generate profits. The company saw its Bitcoin production 22% higher just last month compared to 2023, despite experiencing unplanned outages due to power failures at its Florida facilities. Marathon’s Bitcoin holdings have also risen to 16,900, representing a 49% increase year-on-year (YOY).
The crypto-related stock trades at a relatively modest price-to-earnings (P/E) ratio of 19.5x, slightly below Nasdaq’s 21.2x for a Bitcoin technology stock. It recently posted a 229% Q4 revenue increase, net income of 229%, and $261 million while seeing its hashrate soar 253% and debt downsized by 56%. Higher bitcoin prices and transaction fees will likely boost Marathon’s sales and profitability as the company shifts away from a third-party hosted mining company to improve its operational efficiency as a self-mining firm.
Microstrategy (MSTR)
Microstrategy (NASDAQ:MSTR) is the last of the crypto-related stocks to pick. It is the largest institutional holder of Bitcoin globally, owning over 205,000 Bitcoins. This exceeds holdings of Bitcoin ETFs, including those managed by Blackrock (NYSE:BLK) through its iShares Bitcoin Trust (NASDAQ:IBIT). Its founder, Michael Sailor, is a Bitcoin proponent and believes the total market capitalization of the leading cryptocurrency could surpass gold. This implies a further ten-fold increase may be realized.
MSTR has pursued a strategy of exploiting increased share prices to sell stock and finance new Bitcoin acquisitions, further connecting the business’s performance to the path of the cryptocurrency. The crypto-related stock soared 14% recently following an announcement to purchase an additional 12,000 Bitcoins for $821.7 million.
On the date of publication, Stavros Tousios did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
