We recently published a list of 7 Most Undervalued Blockchain Stocks To Buy According To Analysts. In this article, we are going to take a look at where Cipher Mining Inc. (NASDAQ:CIFR) stands against the other 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.
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).
A close-up of a laptop with a Bitcoin ecosystem monitor running in the background.
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.
Overall CIFR ranks 3rd on our list of most undervalued blockchain stocks to buy according to analysts. While we acknowledge the potential of CIFR as an investment, 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 CIFR 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.
