In this article, we will explore the 7 most undervalued blockchain stocks to buy according to analysts.
Transforming Finance: The Impact of Blockchain Technology
The blockchain industry is witnessing significant trends that are shaping its future and expanding its use cases across various sectors. One of the most notable trends is the growth of Decentralized Finance (DeFi), which is transforming traditional financial systems by providing peer-to-peer financial services on public blockchains without intermediaries.
Established financial institutions are increasingly adopting blockchain technology to enhance transparency and efficiency. According to a report by The Business Research Company, the global market for blockchain in banking and financial services was valued at $4.61 billion in 2023. The market is expected to expand significantly at a compound annual growth rate (CAGR) of 40.4% during 2024-2028 to reach a value of $27.69 billion by the end of the forecast period.
According to the 2024 Geography of Cryptocurrency Report by Chainalysis, an American blockchain analysis firm, global crypto activity is on the rise. Between Q4 2023 and Q1 2024, the total value of global crypto activity increased significantly to surpass levels seen in 2021 during the crypto bull market.
In January 2024, the US Securities and Exchange Commission (SEC) approved the first spot Bitcoin exchange-traded funds (ETFs), marking a significant milestone for the cryptocurrency market. This approval led to a surge in Bitcoin activity across all regions, particularly in institutional-sized transfers and in regions with higher-income countries like North America and Western Europe. Meanwhile, stablecoin usage saw higher growth among retail and professional transfers, especially in lower-income areas such as Sub-Saharan Africa and Latin America. The Geography of Cryptocurrency Report also shows that DeFi services have seen substantial year-over-year growth, especially in areas like Sub-Saharan Africa, Latin America, and Eastern Europe.
Crypto investing is becoming more mainstream and institutionalized with Bitcoin ETFs. However, blockchain technology and tokenization also have the potential to disrupt the traditional ETF model. On September 28, CNBC reported that Janus Henderson, a leading global asset management group, has announced a partnership with Anemoy Limited and Centrifuge to launch the Anemoy Liquid Treasury Fund (LTF), a tokenized fund that provides investors direct access to short-term US Treasury bills. Nick Cherney, head of innovation at Janus Henderson, emphasized that this development represents an evolution in delivering investment services to clients more efficiently rather than a threat to the ETF industry.
This new fund will retain the typical features of an ETF while enabling trading on a blockchain platform. This offers investors benefits like 24/7 trading, instant settlement, and enhanced transparency regarding fund holdings, surpassing what traditional ETFs provide. Cherney stated that the firm aims to be at the forefront of this opportunity, which reflects a broader trend of integrating blockchain into financial services.
These trends highlight the growing interest in blockchain technology and its potential to reshape financial systems worldwide.
With this background in mind, let’s take a look at the 7 most undervalued blockchain stocks to buy according to analysts.
Methodology
To compile our list of the 7 most undervalued blockchain stocks to buy according to analysts, we reviewed our own rankings, sifted through ETFs, and consulted various online resources. From an initial pool of over 30 stocks involved in the blockchain space, we focused on those trading at under 23 times their forward earnings as of October 4. This helped us identify stocks that are cheaper than the S&P 500 Index, which has a forward P/E of 23.6 as of October 4 (as per WSJ).
We included only those stocks that are estimated to have positive earnings growth this year. From this list, we selected the stocks that analysts believe possess the greatest potential for growth. Finally, we ranked the 7 most undervalued blockchain stocks to buy according to analysts based on their average price target upside potential as of October 4, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? 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 Undervalued Blockchain Stocks To Buy According To Analysts
7. Nu Holdings Ltd. (NYSE:NU)
Forward P/E: 22.32
Earnings Growth: 72.00%
Analysts’ Upside Potential: 13.38%
Number of Hedge Fund Holders: 59
Nu Holdings Ltd. (NYSE:NU) is one of the world’s largest digital banking platforms, serving more than 100 million customers across Brazil, Mexico, and Colombia. The company offers a variety of services, including credit cards, digital accounts, and cryptocurrency trading.
Recently, the company launched a cryptocurrency transfer feature that allows customers to send and receive Bitcoin, Ethereum, and Solana directly from their wallets. This innovative service is designed to provide users with greater control over their crypto assets while maintaining competitive fees through a unique pricing model that stabilizes blockchain fluctuations. To ensure security and compliance, Nu Holdings Ltd. (NYSE:NU) is collaborating with Chainalysis to monitor transactions and protect against illicit activities.
On June 25, 2024, Nu Holdings Ltd. (NYSE:NU) announced a partnership with Lightspark to integrate the Bitcoin Lightning Network, Bitcoin’s second-layer blockchain, into its platform. This collaboration aims to enhance the Nu app by allowing faster and more cost-effective transactions for its customers. As part of this agreement, engineering teams from both companies will work together to explore new blockchain solutions. The integration of Lightning will enable Nubank to offer innovative features that improve user experience. With this move, the company reinforces its commitment to providing efficient financial services and positions itself as a leader in the evolving blockchain landscape.
Overall, the company has shown remarkable growth in its business operations, reaching 105 million customers by the end of Q2 2024, a 60% increase from two years ago. The company continues to excel in Brazil, adding an average of 1.2 million new customers monthly, bringing the total to 95.5 million in that region. Mexico is also thriving, with 1.2 million new customers added in the quarter, resulting in 7.8 million total customers. Colombia exceeded the 1 million customer milestone, ending the quarter with nearly 1.3 million customers. This growth solidifies Nu’s position as the leading digital financial platform in Latin America.
The company reported a revenue of $2.8 billion for the second quarter of 2024, reflecting a 65% year-over-year increase driven by successful cross-selling, upselling, and new product introductions. The gross profit reached $1.4 billion, marking an impressive 88% growth year-over-year with a gross margin of 47.7%. Net income climbed to $487 million, representing a 134% increase compared to the previous year, while adjusted net income hit $563 million, up 131% year-over-year.
Nu Holdings Ltd. (NYSE:NU) has established a strong business model centered on consistent customer growth, innovative product offerings, and efficient operations. Analysts are also bullish on NU and have a consensus buy rating on the stock. The 12-month median price target set by analysts indicates a potential upside of 13.38% from current levels.
According to Insider Monkey’s Q2 database of over 900 hedge funds, 59 hedge funds held stakes in Nu Holdings Ltd. (NYSE:NU). As of June 30, Berkshire Hathaway holds 107.11 million shares of the company, valued at $1.38 billion, making it NU’s most prominent shareholder.
6. WisdomTree Inc. (NYSE:WT)
Forward P/E: 14.47
Earnings Growth: 67.60%
Analysts’ Upside Potential: 26.39%
Number of Hedge Fund Holders: 20
WisdomTree Inc. (NYSE:WT) is a global financial innovator that leverages blockchain technology to offer a diverse range of exchange-traded products (ETPs), solutions, and services. The company has developed and launched innovative digital products, services, and structures that provide enhanced access, transparency, and user experience. These include the company’s digital or blockchain-enabled mutual funds and tokenized assets, as well as its blockchain-native digital wallet, WisdomTree Prime.
On September 18, 2024, the company launched WisdomTree Connect, a new platform designed to provide broader access to tokenized real-world assets (RWAs). This innovative platform aims to allow users to interact with any WisdomTree-issued token, in any wallet, across supported blockchains. Users can access WisdomTree digital funds using their own wallet infrastructure, including businesses and institutional clients. The platform will enable firms to access yield-generating products like the WisdomTree Government Money Market Digital Fund directly on-chain. This solution streamlines the investment process, making it easier for crypto-native institutions to manage their assets without needing to convert stablecoins into fiat currency first.
During the second quarter of 2024, WisdomTree Inc. (NYSE:WT) has demonstrated strong financial performance with record assets under management (AUM) of $109.7 billion. The company reported revenues of $107 million, marking a 25% increase compared to the same quarter last year, thanks to higher average AUM. Operating margins expanded significantly, achieving over 35%, while earnings per share rose by 78% year-over-year.
The company is actively pursuing both business-to-business (B2B) and direct-to-consumer initiatives. In the Q2 2024 earnings call, management shared that WisdomTree Prime, the company’s direct-to-consumer app, is now available in 44 states, reaching nearly 80% of the US population.
WisdomTree Inc.’s (NYSE:WT) effective strategies and operational efficiency have helped it establish itself as a significant player in the evolving landscape of blockchain finance. It ranks among the most undervalued stocks in the blockchain space.
WT can be considered cheap at current levels. It is trading at 14 times its forward earnings. Additionally, analysts have a consensus buy rating on the stock. The median 12-month stock price target set by analysts indicates a potential upside of 26.39% from current levels. WisdomTree Inc. (NYSE:WT) was held by 20 hedge funds in Q2 2024.
5. Block Inc. (NYSE:SQ)
Forward P/E: 14.41
Earnings Growth: 98.90%
Analysts’ Upside Potential: 34.29%
Number of Hedge Fund Holders: 59
Block Inc. (NYSE:SQ), formerly known as Square, is a global technology company with a focus on financial services and significant involvement in the cryptocurrency space. The company changed its name in 2021 to reflect its growing focus on crypto and blockchain technologies.
The company provides a range of products and services. Its flagship product, Square, helps businesses manage payments and operations through an integrated ecosystem of commerce solutions. Cash App allows users to send, spend, and invest money in stocks or Bitcoin. Block Inc. (NYSE:SQ) supports the blockchain industry through its subsidiary TBD, which focuses on creating an open platform for accessing Bitcoin and other blockchain technologies. Through Spiral, the company also builds free, open-source projects that advance the use of Bitcoin to enhance economic empowerment, further solidifying its commitment to the blockchain space.
The company’s business model caters to various customer needs, from small businesses to individual users, creating multiple revenue streams. On top of that, Block Inc. (NYSE:SQ) continues to explore new ways to innovate within the cryptocurrency space.
On July 10, Block Inc. announced a significant partnership with Core Scientific, one of the largest Bitcoin miners in North America, to supply advanced 3-nanometer (3nm) mining ASICs, which will enhance Bitcoin mining operations. The ASIC mining chip was built by the Proto team at Block. By integrating these new ASIC chips into Core Scientific’s infrastructure, the collaboration aims to decentralize Bitcoin mining and promote innovation within the sector, aligning with Block’s mission to democratize access to Bitcoin mining technology. The Proto team is developing a modular mining platform designed to improve efficiency, reliability, and sustainability in large-scale mining operations. Block Inc. (NYSE:SQ) could become a major player in the cryptocurrency mining sector.
In the second quarter of 2024, Block Inc. (NYSE:SQ) reported impressive financial results, with gross profit reaching $2.23 billion, a 20% increase year-over-year. Square generated $923 million in gross profit, up 15% year-over-year, while Cash App saw a more substantial increase of 23%, reaching $1.30 billion. This performance demonstrates the strength of Block’s diverse business model and its ability to adapt to market demands, particularly through Cash App, which has been a key driver of revenue.
The company’s profitability metrics also showed remarkable improvement in the second quarter. Operating income was reported at $307 million, with Adjusted Operating Income reaching $399 million. Notably, Adjusted EBITDA nearly doubled year-over-year to $759 million, reflecting a significant increase in efficiency and effective cost management. For the fiscal year ending in June, Block Inc. (NYSE:SQ) achieved an adjusted free cash flow of $1.43 billion, more than double that of the previous year, indicating strong cash generation capabilities.
Block Inc. (NYSE:SQ) is trading at only 14 times its forward earnings. Analysts are also bullish on SQ. The 12-month median price target set by analysts indicates a potential upside of 34.29% from current levels.
By the end of the second quarter of 2024, Block Inc. (NYSE:SQ) was held by 59 hedge funds. ARK Investment Management emerged as the largest shareholder, with a stake valued at $534.78 million. SQ ranks among the top 5 on our list of the most undervalued blockchain stocks to buy according to analysts.
4. Bit Digital Inc. (NASDAQ:BTBT)
Forward P/E: 7.76
Earnings Growth: 300.00%
Analysts’ Upside Potential: 70.62%
Number of Hedge Fund Holders: 8
Bit Digital Inc. (NASDAQ:BTBT) is a platform for digital assets and artificial intelligence (AI) infrastructure. The company is primarily known for its large-scale Bitcoin mining operations located in the US, Canada, and Iceland. Bit Digital expanded its offerings by launching Bit Digital AI, which provides infrastructure services for AI applications. The company also introduced ETH staking to power the Ethereum blockchain.
The majority of the company’s operations run on carbon-free energy sources, allowing Bit Digital to sustainably power leading blockchains and generative AI workstreams. With its diversified business model, Bit Digital Inc. (NASDAQ:BTBT) has positioned itself well at the intersection of two rapidly growing industries: cryptocurrencies and AI.
In the second quarter of 2024, the company produced 244 Bitcoins, a 23% decrease year-over-year due to increased network difficulty and reduced block rewards following the halving in April. In terms of financial performance, Bit Digital Inc. (NASDAQ:BTBT) has demonstrated impressive growth. Total revenue for the second quarter surged to $29 million, marking a 220% increase compared to the same period in 2023. This growth was primarily driven by the successful launch of its high-performance computing (HPC) services and higher Bitcoin prices, with Bitcoin mining revenue rising by 80% year-over-year to reach $16.1 million.
The company’s HPC services business generated $12.5 million in revenue, a remarkable achievement considering this was the first full quarter for this business line. This growth reflects the company’s strategic pivot towards providing infrastructure for AI applications, leveraging its expertise in digital asset mining.
At the end of the second quarter of 2024, the company held over $90 million in Ethereum and has significantly increased its ETH position through Bitcoin conversions. Management believes ETH has significant long-term potential. Additionally, Bit Digital Inc. (NASDAQ:BTBT) earned 109.4 ETH from staking during the quarter, representing approximately $374,000 in revenue.
The company maintains a debt-free balance sheet. However, it is exploring potential debt financing options to help accelerate the growth of its HPC services business.
Bit Digital Inc. (NASDAQ:BTBT) ranks fourth on our list of the most undervalued blockchain stocks according to analysts. The company is poised to capitalize on the increasing demand for AI computing resources and services. BTBT is trading at over 7 times its forward earnings. The median 1-year stock price target set by analysts indicates a potential upside of 70.62% from current levels.
3. Cipher Mining Inc. (NASDAQ:CIFR)
Forward P/E: 5.86
Earnings Growth: 70.00%
Analysts’ Upside Potential: 70.73%
Number of Hedge Fund Holders: 15
Cipher Mining Inc. (NASDAQ:CIFR) ranks among the top 3 on our list of the most undervalued blockchain stocks to buy according to analysts. It is a prominent player in the blockchain space, specializing in industrial-scale Bitcoin mining. The company is dedicated to enhancing and fortifying the critical infrastructure of the Bitcoin network in the US. Cipher Mining’s mission revolves around creating a robust foundation necessary for the Bitcoin network to thrive, reflecting its belief in Bitcoin’s potential to transform financial systems.
The company leverages extensive expertise from various fields, including technology, fintech, energy, and finance. It also has significant experience in cryptocurrencies and blockchain technology. In September 2024, Cipher Mining Inc. (NASDAQ:CIFR) produced 155 BTC and sold 923 BTC, ending the month with a balance of 1,512 BTC.
In terms of financial performance, Cipher mined 563 Bitcoin and generated revenues of $37 million at an average price of $65,000 per Bitcoin during the second quarter of 2024. This represents a year-over-year revenue increase of 18%, largely driven by rising Bitcoin prices and partially offset by the halving in April.
Furthermore, Cipher Mining Inc. (NASDAQ:CIFR) recently completed the acquisition of a new site in West Texas for $67.5 million, which will enhance its operational capacity with 300 MW of front-of-the-meter capacity and participation in the ERCOT market. With this acquisition and other recent investments, the company’s portfolio is expected to grow to more than 2.5 GW across ten sites.
The company’s strategic acquisitions and operational expansions indicate strong potential for profitability in the evolving cryptocurrency landscape. Analysts are also bullish on CIFR. Analysts currently hold a consensus buy rating on the stock and the 1-year median price target of $7.00 set by analysts indicates a potential upside of 70.73% from current levels.
Cipher Mining Inc. (NASDAQ:CIFR) appears to be an appealing investment option due to its current valuation. It is currently trading at only 5.86 times its forward earnings. CIFR is held by 15 hedge funds at the close of Q2 2024.
2. Riot Platforms Inc. (NASDAQ:RIOT)
Forward P/E: 20.88
Earnings Growth: 203.60%
Analysts’ Upside Potential: 129.30%
Number of Hedge Fund Holders: 12
Riot Platforms Inc. (NASDAQ:RIOT) ranks second on our list of the most undervalued blockchain stocks to buy according to analysts. Primarily focused on Bitcoin and general blockchain technology, Riot is one of the most prominent Bitcoin mining companies. It supports the Bitcoin blockchain through large-scale mining operations in the United States. The company also has electrical switchgear engineering and fabrication operations in the US state of Colorado.
The company is actively developing its Corsicana Facility, which will ultimately have a total capacity of 1 gigawatt (1,000 MW). In September, Riot Platforms Inc. (NASDAQ:RIOT) completed the third building of Phase 1, increasing the facility’s power capacity to 300 MW.
Riot Platforms has shown impressive growth in its Bitcoin mining operations, recently mining 412 BTC in September 2024, which is a 28% increase from August. This brings the company’s total Bitcoin holdings to 10,427 BTC, positioning it as one of the largest holders among public mining companies. The rise in production was driven by an increase in the average operating hash rate across all of the company’s facilities, showcasing Riot Platforms Inc.’s (NASDAQ:RIOT) commitment to expanding its mining capabilities and optimizing its infrastructure.
In the second quarter of 2024, Riot Platforms Inc. (NASDAQ:RIOT) reported $55.8 million in Bitcoin mining revenue, reflecting a 12% increase compared to the same period last year. The company also achieved an engineering gross profit of $1.4 million, up from $1.1 million in Q2 2023. These financial results indicate that Riot is successfully expanding its mining operations to enhance its profitability.
In July, Riot Platforms Inc. (NASDAQ:RIOT) made a strategic move by acquiring Block Mining, a privately held Bitcoin miner based in Kentucky. This acquisition adds 60 megawatts of operational capacity, with the potential to expand to 110 megawatts this year. This acquisition allows the company to diversify its operations into new energy markets while also enhancing its growth trajectory in the Bitcoin mining sector.
With its strategic expansions and strong performance, Riot Platforms Inc. (NASDAQ:RIOT) has positioned itself as an attractive investment opportunity. RIOT is trading at over 20 times its forward earnings. As of the second quarter of 2024, the stock is held by 12 hedge funds. Analysts are also bullish on RIOT. The 12-month median price target for the stock set by analysts indicates a potential upside of 129.30% from the current stock price.
1. Ryvyl Inc. (NASDAQ:RVYL)
Forward P/E: 3.68
Earnings Growth: 72.90%
Analysts’ Upside Potential: 257.14%
Number of Hedge Fund Holders: 1
Ryvyl Inc. (NASDAQ:RVYL) is an innovative technology company that is focused on revolutionizing payment transactions through innovative blockchain solutions. Founded in 2017 as GreenBox POS in San Diego, California, RYVYL offers a comprehensive suite of blockchain-secure payment processing and point-of-sale technology solutions to manage and track payments for both consumers and businesses. By leveraging its proprietary blockchain ledger and electronic token technology, RYVYL ensures enhanced security, rapid settlement, and data privacy in financial transactions. The company provides various services to merchants and consumers around the globe, including customizable payment solutions backed with blockchain technology.
The company is advancing its position in the payments industry by successfully integrating Visa Direct, which is now operational in five countries and set to expand to 80. Ryvyl Inc. (NASDAQ:RVYL) is processing transactions in 150 countries and plans further integrations in the third quarter of 2024. This initiative enhances RYVYL’s customers’ access to Visa Direct’s network. The company is also implementing the Visa payment enabler network, which will provide the necessary infrastructure for secure electronic payments. This platform allows banks, merchants, and consumers to conduct efficient transactions globally.
In the second quarter of 2024, Ryvyl Inc. (NASDAQ:RVYL) reported that processing volumes reached 1.055 billion, a 55% increase from the previous year. Revenue of $11.9 million in Q2 2024 was down from $14.8 million in the same quarter last year, when the company’s EU operations contributed only $3.8 million. RYVYL EU’s revenue surged by 134% year-over-year to reach $8.9 million in Q2 2024, driven mainly by growth in its Banking-as-a-Service offerings in Europe. The significant growth in European revenue indicates strong demand for the company’s products and services in that market. North American revenue was down due to regulatory impacts on a niche customer base.
In the Q2 2024 earnings call, management shared that Coyni, the company’s payment software supported by blockchain technology, is being deployed across Europe in partnership with First Data. This initiative is aimed at allowing Ryvyl Inc. (NASDAQ:RVYL) to operate as a payment facilitator, enhancing transaction processing capabilities and driving growth in the EU market.
In the US, Ryvyl Inc. (NASDAQ:RVYL) is strategically repositioning its operations to adapt to recent regulatory changes that impacted revenue. By rightsizing its US operations and hiring fintech experts, the company aims to tap into new verticals and expand its customer base.
On August 8, the company announced a licensing agreement for its payment-platform-as-a-service (PPaaS) with a US-based licensee, that will deploy services nationwide for Card Present (CP) and Card Not Present (CNP) transactions. This partnership is expected to create a new revenue stream, allowing RYVYL to earn transaction fees while reducing operational costs and improving gross margins. The PPaaS solution will enhance the payment experience for businesses and consumers by facilitating touchless payments and QR code transactions, positioning both RYVYL and its licensee for increased profitability and market reach.
Ryvyl Inc. (NASDAQ:RVYL) has positioned itself well to capitalize on the evolving financial sector through its strategic partnerships and innovative blockchain solutions.
RVYL is trading at only 3.68 times its forward earnings. Its cheap valuation presents a compelling case for investors. As of October 4, RVYL’s stock is trading at $1.40. Analysts are bullish on Ryvyl Inc. (NASDAQ:RVYL) and the 12-month median price target set by analysts indicates a potential upside of 257.14% from the current stock price.
While we acknowledge the potential of RYVL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RYVL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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