If the cryptocurrency crashes, you don’t want to be without it. These 3 blockchain stocks

For crypto investors, blockchain stocks are important assets to consider. These publicly traded companies offer liquid exposure to broader crypto trends. Accordingly, if Bitcoin (BTC USD) prices rise (which likely means prices of other digital assets rise), these companies tend to outperform on a relative basis. And the ability to buy and sell shares of these stocks on an exchange can provide the simplicity many investors are looking for.

Unfortunately, betting on any of the following three blockchain stocks I will discuss in this article means investors are implicitly betting on where crypto prices are headed. For the following three companies that are Bitcoin miners, this particularly refers to Bitcoin prices. And although Bitcoin prices tend to rise in the long term, it is also true that this asset has experienced sharp declines in the past. Accordingly, there is a precedent for a significant decline if Bitcoin prices do not cooperate with investor expectations.

Bitfarms (BITF)

In June, Bitfarms (NASDAQ:BITF) mined 189 Bitcoins, up from 156 in May. These are some solid growth factors that investors look at and think: Why would I sell a company that is increasing its total Bitcoin production?

Well, for one thing, the company too 134 Bitcoin sold for $8.8 million in June to support ongoing operations. And while the company’s Bitcoin holdings have increased to 905 (worth $55.2 million), further upgrades to new facilities (including installing 39,000 new miners and upgrading the Quebec facility) will cost money. This could mean that the company will have to draw on its existing Bitcoin holdings to fund its ongoing capital expenditures.

Now, Bitfarms has relatively strong fundamentals compared to other miners, including a zero-debt balance sheet and $124 million in liquidity. With a goal too Increase hash rate With a capacity of 35 EH/s by 2025, Bitfarms is positioned for potential revenue and EBITDA growth if Bitcoin trends upwards.

However, the question remains whether this will be the case. In my opinion, there is simply too much risk in this name for investors to consider buying at current levels. If Bitcoin prices drop significantly, this is a company that may be selling Bitcoin at the wrong time, which would lead to a further decline in valuation over time.

Hut 8 (HAUTE)

Hut 8 Mining (NASDAQ:HUT) is among the blockchain stocks on this list that many investors may be bullish on. This company was highlighted was named the top pick by Hallum Capital analysts and its stock price rose to over $21 per share in mid-July. Unfortunately, shares of HUT stock have almost halved since that recent peak and are now trading at around $11 per share.

There are reasons for the stock’s recent upgrade: Hut’s growth potential is significant in an environment of rising Bitcoin prices. But given the fact that the stock is trading around 15x salesit’s clear there’s a lot of enthusiasm in his review. Any significant drop in Bitcoin prices could mean an even bigger downtrend given this stock’s current trading levels.

Increased volatility is my biggest concern for Hut, a company trying to expand into the AI ​​space. The AI ​​trend is losing steam to some extent and we have seen significant sell-offs in this stock in the last few weeks alone. For those looking to avoid this type of volatility in the future, I think HUT stock is a stock worth leaving alone for now.

Beehive (HIVE)

Hive Blockchain (NASDAQ:BEEHIVE) has become an efficient Bitcoin miner, especially after the recent Bitcoin halving. The company strategically acquired advanced mining hardware and maintained its market share despite rising global hash rates. Additionally, Hive began diversifying into the high-performance computing (HPC) market, offering a potential alternative to the volatile Bitcoin sector. This operational efficiency and diversification enables Hive to overcome the challenges of crypto mining while developing more sustainable revenue streams.

However, like the other companies on this list, Hive is investing heavily in its core infrastructure. These large investments could come at the wrong time if Bitcoin prices are actually headed for another down cycle.

The company recently announced the purchase of 500 Bitmain S21 Pro Antminers to continue monthly equipment upgrades. These units, expected to arrive in July, will increase the company’s total operational hashrate to 5.6 EH/s. In early July, HIVE reported a 2% increase in its crypto holdings to 2,503 BTC, with 119 BTC mined in June, matching May’s production. Following this news, shares of HIVE Digital rose over 13% Nasdaqand reached $4.15.

I’m not sure this reaction makes sense given the company’s high valuation (almost three times sales) at a time when it is already loss-making. If a Bitcoin miner can’t make money trading Bitcoin at this level, that’s concerning to me. If you’re in the same boat, this might be a stock to avoid right now.

At the time of publication, Chris MacDonald did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication policies.

At the time of publication, the responsible publisher did not hold, directly or indirectly, any positions in the securities mentioned in this article.