Blockchain industry has been categorised as the most transformative technology as of now. Advent of digital era and migration of several critical sectors including defense, banking, and healthcare to digital space has changed thy way humans perform their tasks in 21st century. Digital technologies focus on reducing paperwork and they streamline processing. However, at the same time, these technologies end up leading to new security risks. Given this new age digital transformation, investors continue to focus on best undervalued blockchain stocks to buy so that they can exploit the opportunities provided.
Demand for blockchain stocks has increased because blockchain provides unique security solution to all the security risks. Just to let our readers know, blockchain system refers to the ledger of sorts which is made up of computers. Every time a ‘transaction’ gets executed on this system, record gets stored on each and every node which gets secured through cryptography. This gives reliable data backup because records are not contingent on the single storage point and network administrators are allowed to monitor full system to properly determine in case there is a fault. Bitcoin remains the centre point of the blockchain. Therefore, demand for best undervalued blockchain stocks to buy is always on the rise.
Because cryptocurrency and blockchain tend to move hand in hand, any kind of discussion of blockchain remains incomplete without cryptocurrency. On this note, though 2022 was not a year for renowned cryptocurrencies, the 2023 gave cryptocurrency investors some optimism. This can be seen as Bitcoin provided whopping return of more than ~150% YTD. One the critical reasons for this rally is the expectations that Bitcoin ETF, which enables stock market investors to gain from currency, can get approved by the US government sooner or later. That being said, even if an ETF is not official, finance industry continues to make big moves in blockchain industry.
With this in mind, we will now have a look at some of the best undervalued blockchain stocks to buy as crypto market recovery is underway.
1. HIVE Digital Technologies Ltd.
The company is in the business of offering infrastructure solutions in blockchain industry, which include the mining of digital currencies.
It announced its earnings report for 2Q ended September 30, 2023, with its revenue touching $22.8 million in the quarter by mining 801 Bitcoin with 20% gross operating margin. This represents $4.6 million of income from operations. The company stated that this was a challenging quarter as Bitcoin prices remained weak on quarter over quarter basis, with difficulty increases being experienced.
The company noted that HIVE’s production of 801 Bitcoin in 2Q exhibits a decline of 6.6% YoY as it mined 858 Bitcoin during the same period of the last year. This was in large part because of rise in Bitcoin mining network Difficulty of ~82%, representing that more miners compete and with more efficient equipment for same daily opportunity of 900 coins.
The company’s revenue declined YoY as a result of Ethereum Merge and significant mining difficulty growth. Gross operating margin during 2Q came in at $4.6 million, or 20% of revenue, as compared to $15.9 million, or 54% of revenue, in same period of the prior year. Gross operating margin remains partially dependent on external network factors which includes mining difficulty, amount of digital currency rewards and fees it gets for mining and market price of digital currencies.
2. Bitfarms Ltd.
It is a global, publicly traded Bitcoin mining company as it develops, owns, and operates vertically integrated mining farms having in-house management and company-owned electrical engineering, and multiple onsite technical repair centers.
The company has released its financial results for 3Q ended September 30, 2023, and it saw revenues of $35 million, net loss of $19 million, and Adjusted EBITDA of $7 million. It raised its operating capacity by 27 MW to 234 MW and then by another 6 MW to 240 MW in month of October 2023. It executed plans to expand farms in low-cost hydro power in Québec and Latin America. It continued to strengthen its balance sheet liquidity prudently preparing for next BTC Halving.
It saw gross mining profit and gross mining margin of $13 million and 38%, respectively in comparison to $14 million and 42% in 2Q23, respectively. It earned 1,172 BTC at average direct cost per BTC of $16,900 in comparison to $15,700 in 2Q23. The company was holding $47 million in cash and 703 BTC which were valued at ~$19 million based upon the BTC price of ~$27,000 as at 30th September 2023.
3. Iris Energy Limited
The company is a bitcoin mining organisation. It is engaged in building, owning and operating data centers and electrical infrastructure for BTC mining mainly powered by renewable energy.
On 30th November 2023, it announced the acquisition of 1.3 EH/s of new-generation Bitmain T21 miners for $14/TH5 (which equates to ~$18.6 million), out of which 20% is deferred.
The company returned record revenue for FY23 as it increased operating hashrate and finally mined more bitcoin. It posted 28% rise in revenue to $75.5 million for 12 months ended 30th June, exhibiting a rise from $59 million in the year earlier. Increase was seen despite a fall in average price of bitcoin. Bitcoin mined went up by 133% to touch a record 3,259, mainly because of growth in operating hashrate. FY23 was the transformational year for the company as it increased its operating hashrate to 5.6 EH/s and expanded its power capacity to industry-leading 760MW.
While above are some of the best undervalued blockchain stocks to buy as crypto market recovery is underway, there are several other stocks catering to this space which should perform well.
Blockchain technologies are widely accepted in the financial industry too as Franklin Resources, Inc. was the 1st financial company in the U.S. which launched mutual fund that utilises blockchain for record-keeping purposes. Later on, JPMorgan Chase & Co. decided to expand banking services and included blockchain technologies as it went live on Partior interbank network.