In the run up to the Presidential elections, Bitcoin rallied past $15,000 on November 5th, reaching its record high in three years. Since the beginning of this year, Bitcoin has more than doubled. The month of October has been particularly happening with the Bitcoin surging over 40%. It has also leapfrogged the major asset classes in 2020. The Bloomberg Galaxy Crypto Index of digital currencies has increased by nearly 120% in 2020, surpassing even the 30% rise in the value of gold. As Bitcoin skyrocketed, the US dollar dropped to its lowest level since 2018.
The coronavirus crisis, diminishing the value of the US dollar, and a dovish monetary policy stance, have enhanced the appeal of the cryptocurrency among investors. They are now considering Bitcoin has a hedge against inflation and a store of value.
Experts believe that the victory of Joe Biden will further strengthen the value of Bitcoin and it can even cross $20,000, its highest level since 2017.
The leading digital payments platforms like Paypal (PYPL) and Square (SQ) are now supporting cryptocurrencies as payment options. This has further enhanced the confidence of investors in Bitcoin. CNBC Bitcoin investor Mike Novogratz even believes that every central bank would issue a digital currency within the next five years. In October, Federal Reserve Chairman Jerome Powell, in an IMF sponsored event, acknowledged the prospects of digital currency. However, considering the challenges, he said, it is more important for the United States “to get it right than it is to be first.”
The possibilities of wider Bitcoin adoption and its value reaching record levels in 2020 position companies like Riot Blockchain Inc. (RIOT), NVIDIA Corporation (NVDA), and Advanced Micro Devices, Inc. (AMD) well for significant gains. While RIOT is a core Blockchain operator, NVDA and AMD manufacture GPUs for cryptocurrency mining. Moreover, some investors wish to gain from the current Bitcoin momentum but aren’t ready for the risks associated with the cryptocurrencies. So, investing in these stocks is the best option for them.
Riot Blockchain Inc. (RIOT)
RIOT primarily focuses on the cryptocurrency trading space. The company specializes in Bitcoin mining operations. RIOT builds, supports, and operates the Blockchain technologies ecosystem. Besides, the company has exposure to trading digital currencies and also offers accounting and auditing services for blockchain-based assets. TessPay is RIOT’s payments ecosystem offering blockchain options for telecommunications companies. At the end of 2019, RIOT had nearly 7,400 installed and operating miners.
On October 7th, RIOT purchased an additional 2,500 S19 Pro Antminer rigs from BitmainTech PTE. The company wants to increase its current hash rate from around 500 PH/s – to an estimated 2.3 EH/s by June 2021. RIOT paid $6.1 million for the rigs whose delivery and deployment are scheduled for December.
During the second quarter ended June 2020, RIOT’s revenue dropped 20.8% year-over-year to $1.9 million due to the downtime for relocating all mining operations from the Oklahoma City facility to Coinmint’s lower-cost facility. The company’s net loss for the quarter widened to $10.6 million, compared to $1.3 million in the prior-year period, impacted by a $9.4 million impairment charge arising from RIOT’s Coinsquare investment. At the end of the second quarter, the company had $16.4 million in cash and cryptocurrencies. As of June 2020, the company invested $7 million in next-generation miners that would be realized in the second half of 2020
Analysts expect revenue for the fourth quarter ending December to be $2.5 million, indicating a 43.8% increase year-over-year. EPS for the quarter is estimated to increase at 20% per annum over the next five years.
RIOT rallied 225.9% year-to-date to end at $3.65 on Friday. Over the past six months, the stock soared 187.4%.
How does RIOT stack up for the POWR Ratings?
A for Trade Grade
B for Peer Grade
B for Overall POWR Rating
The stock is also ranked #11 out of 54 stocks in the Technology – Services industry.
NVIDIA Corporation (NVDA)
NVDA is one of the top manufacturers of Graphic Processing Units or GPUs, a critical component used in the hardware for crypto mining. GPUs are better equipped to handle large mathematical computations compared to traditional processors.
The processing of transactions happening on Blockchain is called mining. While conducting the process, the miner gets a freshly minted cryptocurrency.
The economic downturn due to the pandemic has also led professional cryptocurrency traders to consider the mining as a means of passive income. According to CoinTelegraph, currently, the highest income in mining can be achieved with the Nvidia GeForce RTX 2080 Ti. For a faster payoff, even Nvidia GeForce GTX 1660 Super cards remain a popular choice.
Cloud mining is a mechanism of being able to mine cryptocurrencies like Bitcoin without the hassles of a hardware installation. The phenomenon is on the rise and NVDA is poised to win from it. Presently, GPUs for mining isn’t a leading revenue source for NVDA, but considering the Bitcoin boom, the company stands to win in the long run. As the price of bitcoin and its adoption increase, the demand for NVDA’s GPU chips will be on a rise.
On a year-to-date basis, NVDA surged 147.6% to close Friday’s session at $582.48. During the past six months, the stock rallied 95.6%.
It’s no surprise that NVDA is rated “Buy” in our POWR Ratings system. It also has a “B” for Trade Grade, Buy & Hold Grade, and Industry Rank. In the 86-stock Semiconductor & Wireless Chip industry, it is ranked #15.
Advanced Micro Devices, Inc. (AMD)
AMD is one of the leading chipmakers globally and manufactures GPUs and CPUs. As Blockchain algorithms require PCs, servers, compute platforms, and most importantly CPUs and GPUs, AMD is strategically positioned to offer advanced technologies for faster blockchain technologies.
The company is gearing up to launch its Big Navi Graphics Cards on November 18th with Radeon RX 6800, 6800 XT. Experts believe that it’s Navi GPU would help to address the rising cryptocurrency demand. AMD could also repurpose its older RDNA cards to play a role in the cryptocurrency markets. The company’s navi10 blockchain SKU is a distinguished version of its NAVI card which would focus on cryptocurrency mining. The navi10 is based on RDNA 1.0 architecture, on the 7nm FinFET process node.
The new Manda Miner PC by M&A Technology is specifically designed for cryptocurrency mining besides gaming and has premium components powered by AMD among others.
AMD is leaving no stone unturned to strengthen its foothold in the blockchain market. W3BCLOUD, a crypto mining facility, is being jointly developed by AMD and ConsenSys, a Blockchain technology operator. This has already raised $20 million to triple its GPU capacity as of June 2020.
On a year-to-date basis, AMD rallied 87.3% to close Friday’s session at $85.88. During the past six months, the stock surged 64.7%. As the Bitcoin price skyrockets, AMD also stands to gain due to its GPU and CPU support to cryptocurrency miners.
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RIOT shares were trading at $3.50 per share on Monday afternoon, down $0.15 (-4.11%). Year-to-date, RIOT has gained 212.50%, versus a 11.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More…