In this article, we will take a look at the 7 most profitable cryptocurrency stocks to invest in.
Where is the Crypto Industry Heading?
Bitcoin recently bounced back to the $62,000 level in the week ended October 11. Simultaneously, Ether jumped 1.73% to $2,443 and Solana climbed 4.23% to $144. The weekly performance reflected a quiet crypto market with Bitcoin slightly dipping while Ether and Solana inching up by less than 1%.
Amidst changing interest rates, Circle’s CEO Jeremy Allaire discussed the impact on the stablecoin market in an interview with CNBC. In his opinion, the Federal Reserve changes interest rates as a tool to either increase or lower or to take a neutral position with respect to the velocity of money in the economy. According to the general view, lower interest rates are better for the markets as the cost of capital becomes less. He considers lower interest rates as a really good thing for a stablecoin issuer like Circle as more capital will be put to work and so the velocity of money will increase and so will the demand for stablecoin money.
Apart from the interest rates, positive news for the crypto industry has come after almost 2 years of the crypto exchange FTX collapse. According to the firm, former customers are to recover a sum worth nearly 119% of what their accounts had at the bankruptcy time. Regarding this, FTX’s current chief executive John. J. Ray III stated that:
“Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history”
Crypto and Elections 2024
With the upcoming 2024 election, the crypto world continues to look forward to what the candidates say about digital currency. After formerly railing against cryptocurrencies, Trump has embraced crypto as he announced the launch of a crypto banking platform World Liberty Financial. He has also expressed support for domestic Bitcoin miners saying that if crypto is going to define the future, he wants it to be mined, minted, and made in the US.
Many crypto enthusiasts are also welcoming Kamala Harris’s viewpoint on the topic. Harris said she would encourage innovative technologies like AI and digital assets during a fundraiser at Cipriani Wall Street. Commenting on this pro-crypto statement, CEO of cryptocurrency exchange Uniswap Hayden Adams, posted on X: “I believe this is her first time referencing crypto publicly and it’s in a positive way.”
Simultaneously, venture capitalist Ben Horowitz has decided to make a significant donation to Harris’s campaign. This move was a reversal from the previous when he and his business partner Marc Andreessen initially backed President Trump. In an internal letter reported by CNBC, Horowitz says that he has spoken to Harris regarding tech policies and believes that although Harris hasn’t revealed her intentions yet, he is hopeful about her administration being much better than the Biden administration which has been destructive to tech policy, especially crypto and AI.
With that being said, let’s move to the 7 most profitable cryptocurrency stocks to invest in.
A close-up of a person’s hands holding cryptocurrency coins.
Our Methodology:
In order to compile a list of the 7 most profitable cryptocurrency stocks to invest in, we created an initial list of 30 companies with the biggest market caps in the sector. Moving on, we shortlisted those that had a positive net income in the trailing twelve months. Finally, we ranked the shortlisted companies in ascending order of their trailing 12 months net income. The number of hedge fund holders has also been mentioned for each stock on the list.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Most Profitable Cryptocurrency Stocks To Invest In
7. Cipher Mining Inc. (NASDAQ:CIFR)
Number of Hedge Fund Holders: 15
TTM Net Income: $16.58 Million
Cipher Mining Inc. (NASDAQ:CIFR) is an industrial-scale Bitcoin mining company that remains dedicated to expanding and strengthening the Bitcoin network’s critical infrastructure in the United States. Cipher focuses on the development and operation of Bitcoin mining data centers in the country. The company was incorporated in 2020 and aims to be the market leader in Bitcoin mining growth and innovation.
Cipher Mining Inc. (NASDAQ:CIFR) is uniquely positioned to maximize opportunities in both Bitcoin mining and HPC infrastructure. The firm strategically expanded into the High-Performance Computing (HPC) business and holds the potential to become a market-leading HPC infrastructure provider.
During the month of September, the company focused on the upgrade of the mining fleet at Odessa which is anticipated to be completed by year-end. This will make Cipher have one of the most efficient fleets of mining rigs in the industry. The firm also progressed its construction of the new Black Pearl data center. September was also important as Cipher closed the acquisition of the 300 MW Barber Lake site, a purchase funded by the sale of bitcoin from its treasury. Hence, the firm exchanged a part of its bitcoin holdings for an asset that is expected to give extraordinary returns for shareholders over the passage of time.
On October 15, Cipher Mining Inc. (NASDAQ:CIFR) announced that the firm had signed option agreements to acquire 1.5 GW of data center sites in West and North Texas. These sites are suitable both for the development of HPC data centers or bitcoin mining operations. Cipher’s active portfolio and development pipeline will comprise 2.5 GW across 10 sites with the new sites added.
In conclusion, Cipher is a leading Bitcoin miner focusing on driving significant long-term shareholder value by developing HPC infrastructure complementary to its bitcoin mining business.
6. Bit Digital, Inc. (NASDAQ:BTBT)
Number of Hedge Fund Holders: 8
TTM Net Income: $28.92 Million
Bit Digital, Inc. (NASDAQ:BTBT) is a large-scale publicly-listed Bitcoin miner and AI Infrastructure provider. The firm operates as a sustainable platform for digital assets and artificial intelligence infrastructure. It has two revenue streams including bitcoin mining and high-performance computing (HPC) services. Bit Digital’s bitcoin mining operations are situated in the United States, Canada, and Iceland.
Bit Digital’s diversified revenue streams reduce its exposure to digital asset price volatility. With a Bitcoin mining fleet of over 50,000 miners, the company boasts an institutional-scale Bitcoin mining business. The footprint remains distributed across stable United States, Canada, and Iceland jurisdictions which tends to maximize business resiliency. Since its inception through September 2024, Bit Digital has earned 7,017 total number of bitcoins. As of September 30, the firm’s active hash rate was approximately 2.43 exahashes per second.
Simultaneously, Bit Digital, Inc. (NASDAQ:BTBT) is building its HPC business. Recently, the firm acquired Enovum Data Centers, an owner, operator, and developer of high-performance computing (HPC) data centers. The strategic move vertically integrates Bit Digital’s HPC business into the colocation services sector of the value chain and enhances its competitive positioning.
With large-scale global Bitcoin mining operations and a Bitcoin business that has been resilient against the odds such as the April halving event, Bit Digital, Inc. (NASDAQ:BTBT) is an attractive cryptocurrency stock that is also reaping benefits of its HPC business.
5. Riot Platforms, Inc. (NASDAQ:RIOT)
Number of Hedge Fund Holders: 12
TTM Net Income: $86.73 Million
Riot Platforms, Inc. (NASDAQ:RIOT) is a vertically integrated Bitcoin mining and digital infrastructure company. The company’s Bitcoin mining data center operations are based in central Texas and Kentucky while Denver and Colorado host the electrical switchgear engineering and fabrication operations. Riot company operates through two primary business segments including Bitcoin Mining and Engineering. The firm has a strong vision of becoming the world’s leading Bitcoin-driven infrastructure platform.
Riot Platforms, Inc. (NASDAQ:RIOT) serves as an industry leader in vertically integrated Bitcoin mining with a significant scale of operations and a strong financial and liquidity position. The firm ended the fiscal second quarter of 2024 with the self-mining hashrate deployed up 106% year-over-year. The firm’s core Bitcoin mining segment remained robust after recording strong gross margins despite the Bitcoin halving. Simultaneously, the Engineering segment returned to gross profit in the quarter and accounted for 14% of the total revenue. Riot also bolstered its growth profile by acquiring the Kentucky Bitcoin miner Block Mining.
According to the September highlights, the firm mined 412 Bitcoin thereby recording a 28% rise over August production. This rise was motivated by an increase in the average operating hash rate across all the firm’s facilities. Riot also accomplished a total deployed hash rate capacity of 28.2 exahashes per second following the completion of its third 100 MW building, Building B1, at its Corsicana Facility. Further increases in hash rate growth are expected after the completion of the fourth 100 MW building at the Corsicana Facility.
With a growing hashrate and operational improvements, a leading position in Bitcoin mining, and a consensus buy rating, Riot Platforms, Inc. (NASDAQ:RIOT) is another attractive cryptocurrency stock.
4. Hut 8 Mining Corp (NASDAQ:HUT)
Number of Hedge Fund Holders: 13
TTM Net Income: $185.15 Million
Hut 8 Mining Corp (NASDAQ:HUT) is a Bitcoin mining company headquartered in Miami, Florida. The company has self-mining, hosting, managed services, and traditional data center operations across North America. It has a portfolio comprising 20 sites including 10 Bitcoin mining, hosting, and managed services sites in Alberta, New York, and Texas, 4 power generation assets in Ontario, 5 high-performance computing data centers in British Columbia and Ontario, and one newly announced site in the Texas Panhandle.
Hut 8 Mining Corp (NASDAQ:HUT) serves as one of North America’s largest Bitcoin miners and a leading vertically integrated operator of large-scale energy infrastructure. Its unique business model revolves around profitable digital asset mining, high-performance computing, and yield programs that complement its self-mined Bitcoin reserves’ value. The firm has years of experience mining digital assets with the most efficient mining servers which makes its operations one of the strongest in the mining industry. It has a proven track record of successfully navigating Bitcoin market cycles.
Hut 8 is currently making efforts to scale its compute layer across Bitcoin mining and AI. In September, the company announced a partnership with BITMAIN to host a next-generation ASIC miner with a purchase option to reach 20 exahashes of self-mining. This partnership is expected to generate approximately $135 million in annualized hosting revenue on a fully ramped basis. Additionally, the firm’s GPU-as-a-service vertical is fully generating revenue now and is fully operational.
The firm’s strategy of building a portfolio that drives long-term market leadership, diversified business lines, and a strong and liquid balance sheet makes it attractive. As of Q2 2024, Hut 8 Mining Corp (NASDAQ:HUT) is held by 13 hedge funds.
3. Marathon Digital Holdings, Inc. (NASDAQ:MARA)
Number of Hedge Fund Holders: 16
TTM Net Income: $288.95 Million
Marathon Digital Holdings, Inc. (NASDAQ:MARA) is a global leader in digital asset compute. The company mines digital assets with a focus on the Bitcoin ecosystem in the United States. Marathon leverages digital asset compute to support the energy transformation by the conversion of clean, stranded, or underutilized energy into economic value.
Marathon is one of the largest and most liquid miners which continues to efficiently scale and expand its operations thereby setting the pace for the Bitcoin mining industry. The firm has a diversified portfolio of Bitcoin mining operations to diversify risks. All of this has translated into strong financial results. From Q4 2022 to Q4 2023, the company witnessed its hashrate, BTC production, efficiency, and market share rise. To better align its internal structure with the pursuit of growth opportunities, the company was organized into three strategic business teams including Utility Scale Mining, Energy Harvesting, and Technology. It also diversified its portfolio of digital asset compute by the launch of Kaspa mining operations.
The firm demonstrated the strength of its globally diversified operations during the month of September. Marathon successfully increased its energized hash rate to 36.9 exahashes per second, a 5% growth from the month of August. BTC production also grew 5% to 705 BTC while the number of Blocks won during September increased 6% from August. Therefore, the firm remains on track to hit 50 exahashes per second by the end of 2024.
Marathon Digital Holdings, Inc. (NASDAQ:MARA) is one of the largest Bitcoin miners globally with a diversified approach to Bitcoin mining which has material results to offer. The firm ranks among the most profitable cryptocurrency stocks to invest in.
2. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 59
TTM Net Income: $680.77 Million
Block, Inc. (NYSE:SQ) is a technology company that focuses on financial services and helps expand access to the economy. Block comprises Square, Cash App, Spiral, TIDAL, and TBD. Square offers an integrated ecosystem of commerce solutions, business software, and banking services for sellers to grow their business while Cash App allows sending, spending, or investing money in stocks or bitcoin. Spiral advances the use of Bitcoin by building and funding free, open-source projects whereas TIDAL is a platform for musicians and their fans. TBD eases access to Bitcoin and other blockchain technologies.
Block, Inc.’s (NYSE:SQ) growth remains at scale with rising profitability. The core businesses are robust with adjusted operating income margins growing significantly for both Square and Cash App. The firm has also expanded its addressable market over time. With Square representing a nearly $130 billion gross profit opportunity and Cash App representing a nearly $75 billion gross profit opportunity in the US, the market potential is strong.
The strong profitable growth across Block depicts that its ecosystems are efficiently delivering differentiated value to its customers. The firm has also shifted to a functional organizational structure to improve collaboration across ecosystems. Previously, Block acquired Afterpay to strengthen sales across Square and Cash App. While Afterpay has inculcated a high-performing sales culture into parts of Block’s business, the firm wants to extend this across the company.
In the fiscal second quarter, the firm’s gross profit grew 20% year-over-year to $2.23 billion. Square had a gross profit of $923 million, up 15% and Cash App had a gross profit of $1.30 billion, up 23%, year-over-year. Block witnessed improvement across all profitability measures including adjusted EBITDA which climbed 98% year-over-year.
Block, Inc. (NYSE:SQ) is a promising cryptocurrency stock that has demonstrated growing profitability and strength across the business. The stock has 59 hedge fund holders, as of Q2 2024.
1. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 45
TTM Net Income: $1.48 Billion
Coinbase Global, Inc. (NASDAQ:COIN) provides a trusted platform that makes it easy for people and institutions to engage with crypto assets. The firm also provides critical infrastructure for onchain activity and support builders. Coinbase aims to fulfill its mission of improving economic freedom in the world.
245,000 ecosystem partners in over 100 countries trust the firm to save, earn, spend, and use crypto. Coinbase’s success in building a global platform is due to five key strengths. These include the trust it has built as one of the longest-running crypto platforms where customers have lost no funds due to a security breach, its crypto-first technology, and easy-to-use products despite the complex underlining technology. The other two competitive advantages include repeatable innovation and a significant scale.
Coinbase’s second quarter marked the sixth consecutive quarter of positive adjusted EBITDA. Primarily driven by stablecoin revenue and blockchain rewards revenue, growth across the board was witnessed. Although transaction revenue was down 27% from last quarter, subscription and services revenue was at an all-time high, growing 17% quarter-over-quarter to $599 million. The firm also reduced the Base fees in the quarter which resulted in 300% quarter-over-quarter growth in the number of transactions on Base.
In conclusion, Coinbase Global, Inc. (NASDAQ:COIN) has the vision, technology, and people needed to truly power the crypto economy. The firm successfully and securely stores over $90 billion in assets on the platform. With a market-leading share of assets on its platform and the aforementioned competitive edges, Coinbase serves as a leading crypto company.
While we acknowledge the potential of COIN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than COIN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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