We recently published a list of 7 Best Bitcoin and Blockchain Stocks To Buy According to Analysts. In this article, we are going to take a look at where Bit Digital, Inc. (NASDAQ:BTBT) stands against the other Bitcoin and blockchain stocks.
What Has Been Happening in the Crypto Industry?
While the digital medium of exchange, cryptocurrency, is created and stored electronically on the blockchain, the most recognized form of it is Bitcoin. Bitcoin has undergone a major historical event in the first quarter of this year. This was when the block reward for bitcoin miners was decreased from 6.25 BTC per mined block to 3.125 BTC per mined block on April 19, also known as the halving event. This halving event is pre-planned and takes place once every four years to slow the pace at which new coins are created. Through this reduced supply of the coin, the concept of Bitcoin as digital gold remains maintained. Previously, Bitcoin halved in 2012, 2016, and 2020.
The impact of this event was most profound for Bitcoin miners who saw their profitability drop due to a reduction in block rewards. Miners who had access to reliable and inexpensive power sources were believed to better deal with the challenges after the Bitcoin halving event. The hashrate is important to be studied in this regard since it is the speed at which a computer can perform hashing computations. Thus, a higher hash rate means higher chances of successfully mining a block and receiving the block reward, a certain amount of BTC received as a reward after validating a new block of transactions. In the latter part of this article, we will be talking about how some of the most efficient miners stayed resilient after this reward halving. To read more about the Bitcoin companies and their response to the macro environment in 2024, you can go through our recent piece on the 15 Biggest Publicly Traded Bitcoin Companies.
The Ongoing US Politics: An Opportunity for the Crypto Industry?
Under the current political dynamics in the US, the crypto industry sees an opportunity with ongoing talks about how Vice President Kamala Harris now running for President, could probably be in support of emerging tech such as the crypto industry. However, the critics oppose the view. In an interview with CNBC, Dennis Kelleher, CEO of Better Markets, emphasized that Harris should not accept pressure from the crypto industry. He mentions the foremost reason behind this as crypto not being among the top concerns of Americans. Among the 88% of Americans who have heard of crypto, a majority 75% of them have hostile views of it. Furthermore, between 61% and 75% of the voters in six of the key swing states view crypto negatively.
Secondly, crypto lacks any legitimate and socially acceptable use with its least harmful use being speculation and gambling. Thirdly, Vice President Harris has been an advocate of investor and consumer protection so she should support the core elements of the financial system, in the views of Kelleher. Lastly, crypto has been discriminating against people of color as they tend to lose money relative to the traditional financial system. While Kelleher believes that innovation and investing in technology are fundamental to the US economy, he states that all financial products need to be federally regulated while the crypto industry seeks special treatment regarding this form of regulation.
Simultaneously, crypto is being embraced through a boost of innovation and forward-thinking as evident from the state of Wyoming which looks forward to launching the country’s first US government-issued stablecoin. The state governor Mark Gordon sees a bright future for digital assets and thinks that the entrepreneurial state could make a difference. Another development in the market was Bitcoin moving 1.84% higher and surpassing the $61,000 mark after Fed Chairman Powell signaled an adjustment to the US monetary policy after months of soaring interest rates. With the most anticipated interest rate cuts on the horizon, the crypto industry will have to wait and watch how the circumstances unfold.
With that being said, let’s move to the 7 best bitcoin and blockchain stocks to buy according to analysts.
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A team of technicians working on a server of bitcoin mining equipment in a data center.
Bit Digital, Inc. (NASDAQ:BTBT)
Average Upside Potential: 56.25%
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. The firm operates Bit Digital AI as an established business line that provides infrastructure services for artificial intelligence applications. Bit Digital strives to achieve its mission of building the premier digital asset mining and HPC services platform while being highly sustainable.
Bit Digital’s diversified revenue streams reduce its exposure to digital asset price volatility. With a fleet of over 50,000 specialized computers, the firm has an institutional-scale Bitcoin mining business. During the second quarter, the firm’s total revenue increased 220% year-over-year to $29 million while the active hashrate climbed 44% to 2.6 exahashes per second. The revenue rise was driven by a higher realized bitcoin price and the commencement of the firm’s high-performance computing services business.
Revenue from bitcoin mining was $16.1 million, an 80% increase year-over-year while the HPC business recorded $12.5 million of revenue. The company has also signed a binding term sheet with Boosteroid Inc., the third-largest cloud gaming provider globally following Microsoft and Nvidia, something that is expected to generate approximately $13 million in revenue for Bit Digital over the five-year term.
Analysts hold a consensus Buy rating on the stock and their 1-year median price target points to a 56.25% upside from the current stock price. With revenue more than doubling from the prior year, gross margins expanding by over 1,000 basis points through business diversification, and network hashrate being resilient despite a reduction in block rewards, Bit Digital is in a good place to benefit from its HPC segment amidst the challenging mining economics.
Overall, BTBT ranks 6th on our list of the best Bitcoin and blockchain stocks to buy. While we acknowledge the potential of BTBT 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 BTBT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.