Crypto stocks: new heights and new ways to capture huge liquidity

Author: JoyChen, EvanLu Source: Waterdrip Capital

As the global financial regulatory environment gradually becomes clearer, cryptocurrency The market has gradually moved from the original "niche circle" to the mainstream financial system. Since the US election, President Trump has had a positive impact on the cryptocurrency industry, promising more friendly regulatory policies, including establishing a national Bitcoin reserve and encouraging the expansion of Bitcoin mining activities in the United States. These promises have boosted market confidence. . In the next few days, general transmission began in the capital market. Against this background, multiple blockchain concept stocks rose broadly.

Currently, more and more listed companies have realized the huge potential of blockchain technology and are actively incorporating it into the company's strategic layout. Many blockchain concept stock companies have strong development momentum and have gained significant attention and investment in the market. These companies have promoted the digital transformation and value creation of their businesses by introducing blockchain technology, and have gradually become important players in the industry. We have paid close attention to many stocks in this field and have seen that their performance in the capital market is becoming more and more outstanding. They are expected to usher in greater development opportunities driven by blockchain in the future:

In recent years, especially It is the regulatory dividend brought by the launch of cryptocurrency-related ETFs (such as Bitcoin spot ETFs) in the United States, which marks that cryptocurrencies are no longer limited to closed digital currency markets, but are deeply integrated with traditional capital markets. Grayscale is one of the pioneers, and its Bitcoin Trust (GBTC) has become a bridge for traditional investors to enter the crypto market. Data show that as of November 20, BlackRock’s Bitcoin Spot ETF (IBIT) had assets under management of nearly $45 billion, and has almost been experiencing net inflows since the beginning of the year. The Grayscale Bitcoin Spot ETF (GBTC) has assets under management of approximately US$20.3 billion, demonstrating investor interest and confidence in this emerging asset class.

The current total market capitalization of the cryptocurrency market is approximately $3.2 trillion, and we can divide it into the following three main parts according to asset classes:

In recent years, especially the regulatory dividends brought by the launch of cryptocurrency-related ETFs (such as Bitcoin spot ETFs) in the United States, it marks that cryptocurrencies are no longer limited to closed digital currency markets, but are deeply integrated with traditional capital markets. . Grayscale is one of the pioneers, and its Bitcoin Trust (GBTC) has become a bridge for traditional investors to enter the crypto market. Data show that as of November 20, BlackRock’s Bitcoin Spot ETF (IBIT) had assets under management of nearly $45 billion, and has almost been experiencing net inflows since the beginning of the year. The Grayscale Bitcoin Spot ETF (GBTC) has assets under management of approximately US$20.3 billion, demonstrating investor interest and confidence in this emerging asset class.

The current total market capitalization of the cryptocurrency market is approximately $3.2 trillion, and we can divide it into the following three main parts according to asset classes:

1. Bitcoin (BTC)

Bit As the core asset of the entire crypto market, currency currently has a market value of approximately US$1.9 trillion, accounting for more than 50% of the total market value of cryptocurrencies. It is not only a value storage tool recognized by traditional finance and native currency circles, but also becomes the first choice of institutional investors due to its anti-inflation properties and limited supply, and is known as "digital gold." Bitcoin plays a key hub role in the crypto market. While stabilizing the market, it also provides a bridge between traditional assets and assets on the native chain.

2. Assets on the native chain

Including public chains Tokens (such as Ethereum ETH), decentralized finance (DeFi) related tokens, and functional tokens in on-chain applications, etc. This field is diverse and highly volatile, and its market performance is driven by technological updates and user demand. The current market capitalization is about $1.4 trillion, which is actually far lower than the high growth expected by the market.

3. The combination of traditional assets and encryption technology

This area covers emerging projects such as on-chain real world asset (RWA) tokenization and blockchain-based securitized assets. Its current market value is only a few hundred billion US dollars, but with the popularization of blockchain technology and the deep integration of traditional finance, this field is developing rapidly. Improving liquidity by tokenizing traditional assets is also one of the main driving forces for future growth in the crypto market. We are confident in this part and believe that it will promote the transformation of traditional finance into a more efficient and transparent digital direction and unleash huge market potential.

Why are we so optimistic about the growth space of traditional assets?

In the past six months, the asset attributes of Bitcoin have undergone a new evolution, and the dominant force in the capital market has also completed its transition from the old force to the Transition to new capital disk.

In 2024, the position of cryptocurrencies in the traditional financial field will be further consolidated. Financial giants including BlackRock and Grayscale have launched exchange-traded products for Bitcoin and Ethereum, providing institutional and retail investors with more convenient digital asset investment channels, which further confirms the relationship with traditional securities. connect.

At the same time, the tokenization trend of real world assets (RWA) is also accelerating, further improving the liquidity and coverage of financial markets . For example, German state-owned development bank KfW issued two digital bonds via blockchain technology in 2024, totaling €150 million. The bonds are settled via distributed ledger technology (DLT), and French computer equipment maker Metavisio has issued a corporate bond to use tokenization to provide capital for its new manufacturing facilities in India, also showing that traditional financial institutions are taking advantage of regional Blockchain technology optimizes operational efficiency, and many financial institutions have already introduced encryption technology into their business models.

Today, a country uses Bitcoin as its core asset, uses ETFs and stock markets as the main channels for capital inflows, and uses US stock listed companies like MSTR as a carrying platform. The capital circulation model is continuously absorbing US dollar liquidity and is in full swing.

The combination of traditional finance and blockchain will create more investment opportunities than assets on the native chain. Behind this trend, it reflects the market's emphasis on stability and practical application scenarios. The traditional financial market has deep infrastructure and mature market mechanisms. When combined with blockchain technology, it will unleash greater potential. In this regard, Waterdrip Capital, especially its Pacific Waterdrop Digital Asset Fund, will also focus on the innovative combination of traditional financial markets and the encryption industry in the future to find investment opportunities in the convergence field.

This research report will briefly analyze the growth model of blockchain concept stocks, especially the way they are combined with on-chain assets, to explore more innovative investment opportunities . For example, MSTR's additional issuance model shows a typical path of exchanging U.S. dollar assets for on-chain assets through convertible bonds and stock issuance. MSTR's stock price has climbed rapidly in line with the rise in Bitcoin prices recently, and its convertible bond due in 2027 has yielded a three-year high, a strategy that has allowed its shares to far outperform traditional technology stocks.

Through these perspectives, it can be found that the future development of the crypto market is not just the increment of digital currency itself, but the huge potential for integration with traditional finance. From regulatory dividends to changes in market structure, blockchain concept stocks are at a critical node in this trend and have become the focus of global investors.

We roughly divide the current blockchain concept stocks into the following categories:

1. Asset-driven concept:

Distinction on the concept of asset allocation For blockchain stocks, the company's strategy is to use Bitcoin as its main reserve asset. This strategy was first implemented by MicroStrategy in 2020 and quickly attracted market attention. Bitcoin acquisitions have been increasing this year as other companies such as Japanese investment firm MetaPlanet and Hong Kong-listed Boyaa Interactive have joined the effort. MetaPlanet announced the introduction of the key performance indicator "Bitcoin Yield" (BTC Yield) developed by MicroStrategy. Its BTC Yield in the third quarter was 41.7%, and in the fourth quarter (as of October 25) it was as high as 116.4%.

TOP30 listed companies globally that use Bitcoin as corporate reserve assets* Data source: coingecko

Specifically, MicroStrategy and other companies The strategy is to provide investors with a new perspective to evaluate the company's value and investment decisions by introducing the key performance indicator "Bitcoin Yield". This metric is based on the number of diluted shares outstanding and calculates the number of Bitcoins held per share, regardless of Bitcoin price fluctuations. It is designed to help investors better understand the company's performance by issuing additional common shares or The behavior of convertible instruments to buy Bitcoin, focusing on measuring the balance between Bitcoin holding growth and equity dilution. MicroStrategy's Bitcoin investment has returned 41.8% so far, indicating that the company has successfully avoided excessive dilution of shareholder interests while increasing its holdings.

However, despite MicroStrategy's remarkable achievements in Bitcoin investment, the company's debt structure still attracted market attention. MicroStrategy currently has total outstanding debt of $4.25 billion, according to reports. During this period, the company raised capital through multiple rounds of convertible bond issuances, some of which also came with interest payments. Market analysts worry that if the price of Bitcoin drops significantly, MicroStrategy may need to sell some of its Bitcoins to pay down debt. However, there are also views that because MicroStrategy relies on its stable traditional software business and low interest rate environment, its operating cash flow is sufficient to cover debt interest, so even if the price of Bitcoin plummets, it is unlikely to force the company to sell its Bitcoin assets. Furthermore, MicroStrategy's stock market cap now stands at $43 billion, and debt is a small component of its capital structure, further reducing liquidation risk.

While many investors are optimistic about the company's staunch Bitcoin investment strategy and believe it will bring substantial returns to shareholders, there are also some investors There are concerns about its high leverage and potential market risks. As the cryptocurrency market is extremely volatile, any adverse market changes may have a significant impact on the asset value of such companies, and their stock prices trade at a significant premium relative to their net asset value. Whether this status can continue is a question for the market. focus of attention. If the stock price pulls back, it could affect the company’s ability to raise capital and, in turn, its future Bitcoin purchase plans.

1. Microstrategy (MSTR)

Business intelligence software company

MicroStrategy was founded in 1989 and initially focused on business intelligence and enterprise solutions. However, starting in 2020, the company transformed into the world's first listed company to use Bitcoin (BTC) as a reserve asset. This strategy has completely changed its business model and market position. Founder Michael Saylor played a key role in driving this shift, going from an early Bitcoin skeptic to a staunch supporter of the cryptocurrency.

Since 2020, MicroStrategy has continued to purchase Bitcoin through its own funds, debt financing and other methods. As of now, the company has accumulated approximately 279,420 Bitcoins, with a current market value of nearly $23 billion, accounting for approximately 1% of the total Bitcoin supply. Among them, the most recent purchase occurred between October 31 and November 10, 2023, with 27,200 Bitcoins acquired at an average price of $74,463. The average price of these Bitcoin positions is $39,266, and with the current Bitcoin price reaching about $90,000, MicroStrategy’s book profit is close to 2.5 times.

Although MicroStrategy faced paper losses of approximately $1 billion on its Bitcoin investments during the 2022 bear market, the company has never sold Bitcoin , but chose to continue adding positions. Since 2023, Bitcoin's strong rise has driven a significant increase in MicroStrategy's stock price, with year-to-date return on investment reaching 26.4%, and cumulative return on investment exceeding 100%.

MicroStrategy's current business model can be regarded as a "BTC-based circular leverage model", which raises funds to purchase Bitcoin through the issuance of bonds. Although this model brings high returns, it also contains certain risks, especially when the price of Bitcoin fluctuates violently. According to the analysis, the price of Bitcoin would need to fall below $15,000 before the company would face the risk of liquidation, which is minimal against the backdrop of the current Bitcoin price of nearly $90,000. In addition, MicroStrategy's financial soundness is further bolstered by the company's low leverage and strong bond market demand.

For investors, MicroStrategy can be regarded as a leveraged investment tool in the Bitcoin market. With the price of Bitcoin expected to rise steadily, the company's stock has great potential. However, we need to be alert to the medium- and long-term risks that debt expansion may bring. In the next 1 to 2 years, the investment value of MicroStrategy is still worthy of attention, especially for investors who are optimistic about the prospects of the Bitcoin market. This is a high-risk, high-return target.

2. Semler Scientific (SMLR)

Semler Scientific is a company focused on medical technology, and one of its innovative strategies is to use Bitcoin as a primary reserve asset. In November 2024, the company disclosed its latest purchase of 47 Bitcoins, raising its total holdings to 1,058, bringing its total investment to approximately $71 million. These acquisitions were funded in part from operating cash flow, indicating that Semler is trying to strengthen its asset structure through Bitcoin holdings and become a representative of asset management innovation.

However, Semler's core business remains focused on its QuantaFlo device, which is primarily used to diagnose cardiovascular disease. However, Semler’s Bitcoin strategy is more than just a financial reserve. In the third quarter of 2024, the company realized $1.1 million in unrealized gains from its Bitcoin holdings. Although revenue fell 17% year-over-year in the quarter, it was still Semler’s Provides a financial hedge against economic fluctuations.

Although Semler's current market capitalization is only $345 million, far lower than MicroStrategy, its strategy of using Bitcoin as a reserve asset has made it Investors regard it as a "mini version of MicroStrategy."

3. Boya Interaction

Boya Interactive is a Hong Kong-listed company whose main business is games. It is one of the top developers and operators in China's board and card game industry. In the second half of last year, it began to test the encryption market, aiming to fully transform into a Web3 listed company. The company has purchased crypto assets such as Bitcoin and Ethereum on a large scale, invested in multiple Web3 ecological projects, and signed a subscription agreement with Pacific Waterdrip Digital Asset Fund SPC, a subsidiary of Waterdrip Capital. Strategic cooperation in Web3 game development and Bitcoin ecosystem. The company has stated: "Purchasing and holding cryptocurrency is an important move for the Group's Web3 business development and layout, and is also an important part of the Group's asset allocation strategy." As of the latest announcement, Boyaa Interactive holds Bitcoin 2641 pieces and 15,445 Ethereum pieces, with a total cost of approximately US$143 million and US$42.578 million respectively.

It is worth mentioning that due to the recent active cryptocurrency market, both Bitcoin and cryptocurrencies have experienced surges. If calculated based on the closing price of cryptocurrency on the 12th, on Bitcoin, Boyaa Interactive had a floating profit of nearly US$90.22 million; on Ethereum, Boyaa Interactive had a floating profit of approximately US$7.95 million, and the two together had a floating profit of nearly US$100 million.

The continued rise in cryptocurrency prices has inspired the market to pay great attention to related concept stocks. Taking the Hong Kong stock market as an example, as of November 12, Linekong Interactive rose 41.18%, Xinhuo Technology Holdings rose 27.40%, and Ouke Cloud Chain rose 11.65%, showing the strong performance of blockchain-related companies. The Hong Kong blockchain market is still in its early stages of development, but the policy environment is continuing to be optimized. The recently introduced policies to support the development of blockchain encourage open innovation and create good growth space for enterprises. Some companies rely on the asset-driven effects brought about by cryptocurrency price fluctuations, and are also actively exploring the practical applications of blockchain technology in gaming, finance, the Metaverse and other fields. Further market growth in the future will depend on the effectiveness of technology implementation and the improvement of the ecosystem, providing investors with clearer direction and confidence.

The value of the cryptocurrency held by Boyaa Interactive has reached approximately HK$2.2 billion. This means that the total value of the cryptocurrency currently held by Boyaa Interactive exceeds the current market value of the company. In the second quarter of 2024, the company recorded revenue of approximately 104.8 million yuan, a year-on-year increase of 5.8%. Among them, the revenue from web games and mobile games were 29 million yuan and 69 million yuan respectively, and the value-added revenue from digital assets was 6.74 million yuan. As for the reasons for the increase in revenue, Boyaa stated in the announcement: "Mainly due to the appreciation of digital assets obtained from the cryptocurrency held by the group."

At the same time, the company plans to Add up to $100 million in cryptocurrency holdings over the next 12 months. In addition, Boyaa Interactive has established a team focused on Web3 game development and related infrastructure research and development. Benefiting from the significant growth of cryptocurrency assets, its first-quarter profit increased by 1,130% year-on-year, pushing the company's stock price to nearly 3.6 times since the beginning of the year, making it a typical asset-driven blockchain concept stock in the market. For the stock, Boyaa Interactive's performance relies on volatility in the cryptocurrency market, and the share price is likely to continue to be driven by growth in asset value.

2. Mining Concept

Blockchain mining concept stocks have received great attention from the market in recent years, especially amid the fluctuations in the prices of cryptocurrencies such as Bitcoin.Mining companies not only benefit from the direct benefits of digital currencies, but also participate to a certain extent. The layout of other high-growth industries, especially artificial intelligence (AI) and high-performance computing (HPC) businesses. With the booming development of AI technology, the demand for AI computing power is rapidly increasing, which has brought new support to the valuation of mining concept stocks. In particular, as power contracts, data centers and their supporting facilities become increasingly scarce, mining companies can gain additional revenue by providing computing infrastructure for AI needs.

However, we generally believe that not all mining companies can fully meet the needs of AI data centers, and mining operations prioritize cheap power supply. , often choosing locations with lower prices and unstable short-term power to maximize profits. Relatively speaking, AI data centers pay more attention to the stability of power, so they are less sensitive to changes in electricity prices and prefer long-term stable power supply. Therefore, not all mining companies’ existing power equipment and data centers are suitable for direct transformation into AI data centers.

Mining concept stocks can be divided into the following categories:

1. Mining companies with mature AI/HPC businesses:These companies not only have a presence in the mining field, but also have mature AI or HPC businesses, and are supported by technology giants such as NVIDIA. For example, Wulf, APLD, CIFR and other companies not only participate in cryptocurrency mining, but also integrate mining and AI computing power needs to a certain extent by building AI computing power platforms and participating in AI reasoning and other businesses, gaining more markets focus on.

2. Focus on mining and hoarding a large amount of coins: This type of company mainly focuses on mining business and holds a large number of Bitcoins coins and other digital currencies. CleanSpark (CLSK) is one example of this type of company, with hoards accounting for 17.5% of the unit’s market capitalization. In addition, Riot Platforms (RIOT) is a similar company, with its currency hoard accounting for 21% of the unit market capitalization. These companies accumulate cryptocurrencies such as Bitcoin in the hope of realizing profits when market prices rise in the future.

3. Composite type of diversified business: This type of company not only engages in cryptocurrency mining and currency hoarding, but also AI reasoning , AI data center construction and other aspects. Marathon Digital (MARA) is a representative company in this category, with its holdings accounting for 33% of the unit’s market capitalization. These companies usually reduce risks in a single area through diversified business layout while improving overall profitability.

As the demand for AI increases, AI computing power and high-performance computing business will be increasingly combined with blockchain mining business. This could further increase mining company valuations. In the future, mining companies will not only be "miners" of digital currencies, but may also become important infrastructure providers behind the development of AI technology. Although this road is full of challenges, in order to meet this trend, many mining companies have accelerated the deployment of AI computing power and data center construction, and are committed to occupying a place in this emerging field.

1. MARA Holdings (MARA)

The largest in North America One of the largest corporate Bitcoin self-mining companies, it was established in 2010 and listed in 2011. The company is dedicated to mining cryptocurrencies, focusing on the blockchain ecosystem and the generation of digital assets. The company provides managed mining solutions based on its proprietary infrastructure and smart mining software, primarily mining Bitcoin. Marathon, similar to Riot, also experienced a 12.6% share price drop, followed by further declines. However, Marathon's stock price has risen rapidly over the past year.

According to the latest data in October, MARA (Marathon Digital) has achieved a computing power of 32.43 EH/s, becoming the first listed mining company to reach this scale. . It is expected to increase its computing power by approximately 10 EH/s when its new 152 MW power capacity comes online. MARA recently added 152 MW of mining power capacity through the acquisition of two data centers in Ohio and the construction of a third new site, which it plans to be fully operational by the end of 2025. Salman Khan, MARA’s chief financial officer, said the asset acquisition costs approximately $270,000 per MW and expects the deployments will help the company achieve its 50 EH/s computing power goal by 2024.

In addition, MARA announced on November 18 the sale of $700 million in convertible senior notes with a maturity date of 2030. The proceeds will be used primarily to purchase Bitcoin, repurchase notes due in 2026, and support the expansion of existing businesses. MARA expects to use the net proceeds from the notes, up to $200 million of which will be used to repurchase a portion of the convertible notes due 2026, with the remainder used to purchase more Bitcoin and for general corporate purposes, including working capital, Strategic acquisitions, expansion of existing assets and repayment of additional debt, etc. This move further demonstrates MARA’s long-term bullish stance on Bitcoin.

2. Core Scientific (CORZ)

Block Chain infrastructure and cryptocurrency mining services

Core Scientific Inc., founded in 2017, its business is mainly divided into two major segments: equipment sales and hosting services , and self-built mines for Bitcoin mining. The company generates revenue by selling consumption-based contracts and providing custody services, while the digital asset mining segment generates revenue from the computing equipment operated by the company that processes transactions on the blockchain network and participates as part of the user pool, Returns are digital currency assets.

Recently, Microsoft (MSFT.US) announced that it will spend nearly $10 billion between 2023 and 2030 to rent servers from artificial intelligence startup CoreWeave. CoreWeave has signed an agreement with Bitcoin mining giant Core Scientific to host an additional 120 megawatts (MW) of high-performance computing power. Through several rounds of expansion, CoreWeave currently hosts a total of 502 MW of GPU capacity in Core Scientific's data centers. Core Scientific shares have surged since signing a multibillion-dollar contract with CoreWeave, up nearly 300%. The company also plans to retrofit part of its data center to host CoreWeave's more than 200 megawatts of GPUs.

The 12-year hosting contract is expected to generate $8.7 billion in total revenue for Core Scientific. Meanwhile, while its Bitcoin mining hash rate remained stable, its market share declined, from 3.27% in January to 2.54% in September.

Taken together, Core has perfectly digested the combination of the two hot topics of AI and Bitcoin. Especially in the field of AI data centers, Core Scientific has won a large number of amount of contracts and actively expand new customers, showing strong development potential. Although the market share of the Bitcoin mining business has declined, the company's progress in the AI ​​data center has provided strong support for its long-term stable growth, and future increases can still be expected.

3. Riot Platforms (RIOT)

Headquarters are located in Riot Platforms in Colorado, USA, focuses on blockchain technology construction, support and digital currency mining business. The company has previously invested in a number of blockchain startups, including Canadian Bitcoin exchange Coinsquare, but has now shifted its focus entirely to cryptocurrency mining.

Riot's stock price has experienced significant volatility, especially as the price of Bitcoin has declined, with the company's stock price falling as much as 15.8% at one point. Yet despite this, the company's stock is still up more than 130% in the past year.

Despite the latest market optimism, which has sent the stock price soaring 66% in just one week, Riot's operating conditions are not ideal. According to its financial report for the third quarter of 2024, the company's total revenue was US$84.8 million, of which Bitcoin mining revenue accounted for US$67.5 million, and its net loss reached US$154.4 million, with a loss per share of US$0.54, far exceeding market expectations for a loss per share. $0.18. Additionally, Riot lost $84.4 million in the second quarter, compared to a net loss of just $27.4 million in the same period last year. Overall, Riot's losses continue to expand. Although the stock price has risen in the short term, the short-term stock price increase only follows the broader market. Whether it can achieve long-term stock price growth is still a question mark.

4. CleanSpark (CLSK)

Green energy encryption Currency Mining

CleanSpark is a company focused on Bitcoin mining using renewable energy. The company's revenue grew to $104.1 million in the second quarter of 2024, up $58.6 million, or 129%, from $45.5 million in the same period last year. However, net loss for the three months ended June 30, 2024, was $236.2 million, or $1.03 per share, compared with a loss of $14.1 million, or $0.12 per share, in the same period last year. It's worth noting that despite a wave of gains in the broader market in early November, CleanSpark (CLSK) did not benefit from it as the company was suspended during the period. The founder of the company explained that the reason for the suspension was due to an error in the calculation of the equity subscription ratio during the recent acquisition process. The company also announced the completion of its acquisition of GRIID, with the goal of increasing the mining farm’s total computing power to 400 megawatts (MW) in the next few years. At the same time, CleanSpark holds large amounts of digital currencies such as Bitcoin. Hoarding amounts to 17.5% of the unit’s market capitalization, meaning a significant portion of its market capitalization is supported by Bitcoin holdings.

From the perspective of stock trends, CleanSpark is one of the representative Bitcoin miners with renewable energy as its core. With its green mining strategy and relative Lower energy costs and long-term development potential. The company's acquisition of GRIID and expansion of mining farm computing power shows that it has an active strategic layout in expanding market share and improving competitiveness. However, although the company's revenue has grown significantly, due to the large losses, investors' attention to its profitability and cash flow will be an important factor affecting future stock price trends. CleanSpark's share price may experience significant volatility as Bitcoin prices fluctuate and energy costs fluctuate.

5. TereWulf (WULF)

Use green energy Cryptocurrency Mining

With reduced operational risks and improved profit margins, energy companies are becoming an important force in the cryptocurrency industry. TeraWulf, the cryptocurrency subsidiary of Beowulf Mining Plc, recently revealed in a regulatory filing that it expects the company’s mining capacity to reach 800 megawatts by 2025, accounting for 10% of the Bitcoin network’s current computing power. TeraWulf is focused on providing sustainable cryptocurrency mining solutions, with a particular focus on harnessing renewable energy sources such as hydropower and solar power, and is developing an AI data center.

Recently, TeraWulf announced that it would increase the total size of its 2.75% convertible bonds to $425 million, of which $118 million was planned to be used for share repurchases. The financing also includes an issuance option, allowing initial purchasers to contribute an additional $75 million within 13 days of issuance. Part of the newly issued bonds, which mature in 2030, will be used for stock buybacks and the remainder for general corporate expenses.

TeraWulf said it will prioritize share repurchases and continue to advance its organic growth in high-performance computing and AI as well as potential strategic acquisitions. TeraWulf's shares have risen nearly 30% since Friday following the news, outpacing the performance of Bitcoin and other mining companies. Mining companies have recently raised funds through convertible bonds and Bitcoin-backed loans to cope with the decline in computing power prices after the Bitcoin halving.

Taken as a whole, TeraWulf’s layout in clean energy and AI mining shows strong growth potential. In the short term, the company may benefit from heightened market focus on green energy and AI mining. However, given the volatility of the mining industry and the overall market environment, long-term performance still requires continued attention and evaluation. In the current climate, TeraWulf's share price rise has an element of hype, but it's also expected to drive further growth through its sustainable strategy.

6. Cipher Mining (CIFR)

Bitcoin Mining company

Cipher Mining is mainly committed to developing and operating Bitcoin mining data centers in the United States, aiming to enhance the infrastructure of the Bitcoin network.

Recently, Cipher Mining announced that it has further expanded its credit cooperation with Coinbase and established a term loan totaling US$35 million. According to financial reports disclosed on November 1, the company increased its original credit line of $10 million to $15 million and added a new term loan of $35 million.

In addition, as the demand for artificial intelligence technology in the encryption market grows, the valuation of Cipher Mining's AI business has also increased. However, Cipher Mining's share price gains have lagged relative to those of peer companies such as CORZ, APLD and WUFL. Although the company's infrastructure investment in the field of Bitcoin mining has achieved certain results, its progress in AI technology layout has been slower, which may affect its stock price performance in the short term.

7. Iris Energy (IREN)

Renewable Energy for Bitcoin Mining

Focus on Bitcoin mining through green energy (especially hydropower) on a global scale. Bitcoin mining business is mainly driven by clean energy and environmental sustainability is its core competitiveness. This is also an important factor that distinguishes it from other mining companies. Compared with traditional coal and oil energy, IREN uses clean energy mining to reduce carbon emissions and reduce operating costs. IREN currently owns multiple clean energy-powered mining facilities and has invested heavily in infrastructure in clean energy-rich regions such as Canada and the United States.

In addition, IREN is also trying to make a layout in the field of cloud computing power, but the prospects of this part of the business are not as clear as its clean energy mining business. Although cloud computing as a business model can reduce the demand for mining hardware to a certain extent and provide investors with a more flexible way to make profits, its revenue model and market acceptance are still in the early stages and are different from traditional Bitcoin. Compared with mining, it is still difficult to show significant profitability. Therefore, IREN’s exploration of cloud computing power can be seen more as a trial project, which is far from mature and its valuation is difficult to overestimate.

In terms of monetizing energy assets, IREN’s progress and potential are currently not as good as some other competitors, such as CIFR (Cipher Mining) and WULF (Stronghold Digital Mining) . These companies have made certain progress in the effective integration of traditional energy assets and the application of clean energy, and have stronger market competitiveness. Although IREN's unique advantages in the field of green energy mining cannot be ignored, compared with CIFR and WULF, its monetization process is still lagging behind, making it difficult to generate sufficient capital return in the short term.

8, Hut 8 (HUT)

Headquarters are located in Canada-based Hut 8 is a company that mainly conducts cryptocurrency mining operations in North America and is one of the largest innovative digital asset miners in North America. The company operates large-scale energy infrastructure and operates in an environmentally responsible manner.

In 2023, Hut 8's annual revenue reached $121.21 million, a year-on-year increase of 47.53%. Revenue further increased to $43.74 million for the quarter ended September 30, 2024, a year-over-year increase of 101.52%. This increase brings total revenue to $194.02 million in the trailing twelve months, representing an annual growth rate of 209.07%.

According to the third quarter report, Hut 8 has accelerated the pace of digital infrastructure platform construction and promoted its commercialization process in the past few months. All the company's data show strong growth momentum and it is continuously strengthening its business development.

9. Bitfarms (BITF)

Headquarters in Canada Bitfarms focuses on the development and operation of Bitcoin mining farms and continues to expand the scale of mining. The company recently announced that it plans to upgrade the 18,853 Antminer T21 Bitcoin mining rigs it originally planned to purchase from Bitmain to the S21 Pro model with an additional investment of $33.2 million. According to its third-quarter financial report, Bitfarms has revised its purchase agreement with Bitmain and expects the upgraded mining machines to be delivered from December 2024 to January 2025. According to TheMinerMag’s analysis, thanks to the adoption of the latest generation of mining machines, Bitfarms’ mining machine costs have been significantly reduced: from $40.6 per PH/s in the first quarter to $35.5 in the second quarter, and further dropped to 29.3 in the latest quarter. Dollar.

Overall, Bitfarms has improved mining efficiency while reducing costs by updating mining equipment and optimizing procurement strategies, showing strong growth potential. This strategy not only improves the company's profitability but also strengthens its position in the highly competitive cryptocurrency market. As the cost of mining machines further decreases, Bitfarms is expected to continue to gain advantage in the Bitcoin mining field, especially if Bitcoin prices recover or market demand increases.

10. HIVE Digital Technologies (HIVE)

Encryption Currency mining company, hpc business.

Hive Digital recently announced the acquisition of 6,500 Canaan's Avalon A1566 Bitcoin mining machines and plans to increase the total computing power to 1.2 EH/s. This move shows that This reflects the company’s continued investment in cryptocurrency mining. However, since the end of last year, Hive Digital has made it clear that it will shift more resources and focus to high-performance computing (HPC) in the future. The company believes that the HPC business has higher profit margins than Bitcoin mining and has certain technical barriers, which can bring more sustainable revenue growth to the company. To this end, Hive transformed 38,000 Nvidia data center GPU cards originally used for mining Ethereum and other cryptocurrencies into on-demand GPU cloud services, opening a new chapter in its AI and HPC fields.

This strategic transformation is in line with the development trend of the industry. Similar to other mining companies such as Hut 8, Hive quickly turned its attention to HPC and AI businesses after Ethereum shifted from POW to POS. Today, Hive’s HPC and AI businesses are already able to generate 15 times more revenue than Bitcoin mining, while demand for GPU computing is growing rapidly. According to a Goldman Sachs report, the GPU cloud services market has bright prospects. Fortune Business Insights predicts that the GPU services market in North America will grow at a compound annual growth rate of 34% by 2030. Especially as the demand for AI projects continues to rise, the large language model technology behind ChatGPT has just begun, and almost all enterprises require a large amount of GPU computing power to support the operation and development of these technologies.

From an investment perspective, Hive Digital's transformation strategy has laid a solid foundation for its future growth. Although the company still has a presence in the field of cryptocurrency mining, with the rapid development of HPC and AI businesses, Hive has gradually shed its over-reliance on traditional Bitcoin mining and opened up more diversified and highly profitable revenue. channel.

3. Infrastructure Infrastructure and solution providers

Mining machine manufacturing/blockchain infrastructure concept stocks refer to the stocks of companies that focus on Bitcoin mining hardware, blockchain infrastructure construction and related technical services. These companies primarily make money by designing, manufacturing, and selling specialized mining equipment (such as ASIC miners), providing cloud mining services, and the hardware infrastructure required to operate blockchain networks. Mining machine manufacturers are at the core of blockchain infrastructure as they provide the hardware equipment used for mining cryptocurrencies such as Bitcoin. ASIC (Application Specific Integrated Circuit) miners are the most common type of miner and are used specifically for mining cryptocurrency. Mining machine manufacturers’ revenue mainly comes from two major sources: mining machine sales and mining machine hosting and cloud mining services.

Generally speaking, the price of mining machines is affected by many factors, including fluctuations in the Bitcoin market, the cost of mining machine production, the stability of the supply chain, etc. For example, when the price of Bitcoin rises, miners' profits also increase, and the demand for mining machines usually increases accordingly, thus driving the revenue growth of mining machine manufacturers. In addition to mining machine production, blockchain infrastructure also includes mining pools, data centers and other cloud service platforms that provide computing power support.

For investors, mining rig manufacturers and blockchain infrastructure companies may offer higher growth opportunities, especially as the cryptocurrency market is on the rise cycle time. There is a positive correlation between the demand for mining machines and the price of Bitcoin. However, such companies also face high volatility risks and are affected by multiple factors such as market sentiment, technological innovation, and policy regulation. Therefore, when investing in such concept stocks, in addition to taking a positive view on the prospects of the cryptocurrency market, you also need to consider the potential risks caused by market uncertainty.

1. Canaan Technology (CAN)

District Research and development of blockchain hardware products

Canaan Technology was founded in 2013. In the same year, it released the world's first blockchain computing device based on ASIC chips, leading the industry to enter In the ASIC era, we have gradually accumulated rich experience in chip mass production since then. In 2016, the mass production of 16nm products marked Canaan Technology as the first company in the advanced manufacturing camp in mainland China. Since 2018, Canaan Technology has successively achieved mass production of the world's first self-developed 7nm chip, as well as mass production of Kanzhi K210, a self-developed commercial edge intelligent computing chip based on RISC-V.

Since its establishment, Canaan Technology has become an important player in the field of blockchain hardware by virtue of its leading ASIC mining machine technology and self-developed chips. Compared to other mining machine manufacturers, CAN and BTDR have more potential benefits as available self-produced mining machines to increase mining profitability. Although the market has experienced a bear market in the past year, Canaan Technology's mining machine sales have remained at a high level. Especially against the backdrop of the rebound in Bitcoin prices, future sales are expected to increase significantly.

The biggest potential positive factor is the change in the price of mining machines. If the price of mining machines rises - for example, due to higher-than-expected demand or limited supply, the price of mining machines will increase. The increase may lead to an increase in the valuation multiples of mining companies, thereby creating a "Davis double-click" effect and increasing the company's overall valuation. CAN recently signed two important institutional orders, among which HIVE purchased 6,500 Avalon A1566 mining machines, which will further promote its sales and revenue growth and also demonstrate the market's recognition and demand for its mining machines.

Judging from Canaan Technology’s fundamentals and market expectations, the current stock price does not fully reflect its future potential. Assuming that the Bitcoin market picks up and mining machine prices remain stable or rise, Canaan Technology's sales revenue and earnings will see greater growth, further pushing its valuation upward.

2. Bitdeer (BTDR)

Provides cloud mining Mining services and mining machine manufacturing

Bitdeer provides global cryptocurrency mining computing power, allowing users to rent computing resources for Bitcoin mining. The company provides computing power sharing solutions, including cloud computing power and computing power market, and also provides one-stop mining machine hosting services, covering deployment, maintenance and management to support efficient cryptocurrency mining.

Recently, Bitdeer released its new generation water-cooled mining machine SEALMINER A2 as the second generation product of the SEALMINER series. The SEALMINER A2 mining machine is equipped with the second-generation chip SEAL02 independently developed by BitDeer. Compared with the A1 series, the A2 has achieved significant improvements in energy efficiency, technical performance and stability. The A2 series includes air-cooled SEALMINER A2 and water-cooled SEALMINER A2 Hydro, designed to meet mining needs in different environments. Both mining machines adopt advanced heat dissipation technology to optimize power consumption control and computing performance to ensure stable operation under high load. According to test data, the energy efficiency of A2 is 16.5 J/TH and the computing power reaches 226 TH/s, which is slightly lower than the 13.5 J/TH of mainstream mining machines on the market such as Bitmain and MicroBT. The company also said that A2 has entered mass production and is expected to add 3.4 EH/s of computing power in early 2025. Bitdeer also plans to complete the tapeout design of the SEAL03 chip in the fourth quarter, with a target energy efficiency of 10 J/TH.

Overall, Bitdeer is in a critical period of innovation and growth, especially in the fields of water-cooled mining machines and computing power sharing. It is worth noting that, as a cloud The mining platform provides computing power leasing and hosting services, not just traditional mining machine sales. Unlike traditional mining machine manufacturing companies, cloud mining and hosting companies are more flexible in capital and resource allocation, and can expand market share by providing users with on-demand computing resources to adapt to investment needs of different sizes. Therefore, while the overall movement of the cryptocurrency market has an impact on Bitdeer's performance, the diversity and innovation of its business model may allow it to remain relatively stable amid market fluctuations.

3. BitFuFu(FUFU)

Cloud Mining Services and digital asset management services

BitFuFu is a Bitcoin mining and cloud mining company supported by Bitmain, dedicated to providing cloud mining services to global users , allowing users to participate in Bitcoin mining without purchasing hardware. According to its latest third-quarter financial report, BitFuFu holds approximately $104 million in digital assets, equivalent to 1,600 Bitcoins. 340 Bitcoins are owned by the company, and the remaining Bitcoins belong to customers of cloud mining and custody services. BitFuFu is not only a service provider in the Bitcoin mining field, but also an important Bitcoin asset manager.

In addition, BitFuFu has reached a two-year credit agreement with Bitmain-owned Antpool, with a maximum loan limit of $100 million. This credit agreement further solidifies BitFuFu’s partnership with Antpool and enhances its flexibility in capital operations. As the Bitcoin market fluctuates, more and more Bitcoin mining companies (such as MARA and CleanSpark) have begun to adopt financing methods such as Bitcoin mortgage loans to flexibly use their Bitcoin assets to support business development and capital expansion.

From an investment perspective, BitFuFu is backed by Bitmain and Ant Pool, which gives it unique advantages in hardware supply and computing power resources. Provide BitFuFu with efficient and stable mining equipment and help it optimize mine operations and mining pool support. Therefore, BitFuFu has obvious technical and resource advantages in the field of cloud mining and can attract more users and capital to enter.

Overall, as the Bitcoin market gradually recovers and the demand for cloud mining increases, BitFuFu will likely benefit from this trend. Compared with traditional mining companies, cloud mining allows investors to participate in Bitcoin mining at a lower cost, especially for users without hardware resources.

4. Exchange concept:

1. Coinbase (COIN)

Cryptocurrency trading platform, digital currency trading and storage services

Coinbase was founded in 2012 and listed on Nasdaq in 2021. It is the first and only legal and compliant listed cryptocurrency exchange in the United States. This status makes it the largest cryptocurrency exchange in the United States by trading volume, while also attracting many institutions to choose it as the platform of choice for custody of crypto assets.

Coinbase and Circle jointly issued USDC, a stable currency anchored to the US dollar, and expanded diversified businesses such as pledge custody. In addition, Coinbase is also the core holding of ARK Invest fund manager Cathie Wood, who has publicly expressed her optimism about it many times.

Coinbase's stock price trend is highly correlated with Bitcoin. For example, its historical high occurred on November 8, 2021, which is consistent with Bitcoin's historical high (2021 November 10, 2011) almost coincides with each other. At the recent low (November 21, 2022), the stock price bottomed in tandem with the price of Bitcoin. From a high of $368.9 to a low of $40.61 in 2021, the stock price fell as much as 89%, and the volatility even exceeded Bitcoin's 78% decline during the same period, reflecting Coinbase's amplified leverage effect in the crypto market.

In the past six months, the fluctuations in Coinbase’s stock price have been mainly affected by regulatory pressure and the approval process of the Bitcoin ETF. In 2023, the approval of a Bitcoin ETF was initially considered a major benefit, but the market later became concerned that such products could have a diversion effect on Coinbase's traditional business model, causing the stock price to fall for a time. Still, post-election market dynamics have been positive for Coinbase.

As Trump won the election, expectations of his cryptocurrency-friendly policies increased market confidence, driving Coinbase's stock price to rise rapidly. Shares briefly dipped to $185 early in the election, but eventually surged to around $329. It can be expected that Coinbase will continue to benefit from the Bitcoin investment demand of ordinary investors in the relatively closed and compliant encryption market in the United States. As the leading legal exchange in the United States, Coinbase has relatively solid fundamentals, and its highly compliant status gives it a greater advantage when policies are favorable. In the future, as more ordinary investors enter the market, Coinbase may attract large-scale traffic.

2. Bakkt Holdings (BKKT)

Bakkt is A leading cryptocurrency platform dedicated to providing compliant crypto asset custody and trading services to institutional investors. The company holds a crypto-asset custody license issued by the New York State Department of Financial Services (NYDFS). Due to security incidents that have occurred on multiple crypto-asset custody platforms in recent years, Bakkt has relied on its compliance and strong regulatory background, especially among institutional clients. Trust is earned.

Bakkt was originally founded by the Intercontinental Exchange Group (ICE) and later became an independent listed company through a spin-off, demonstrating the combination of traditional finance and the crypto economy. . Recently, Bakkt’s stock price has experienced significant gains, mainly due to plans by Trump’s Media and Technology Group (DJT) to fully acquire Bakkt. According to the Financial Times, Trump’s company DJT is in in-depth acquisition negotiations with Bakkt. If the acquisition plan is successful, it will further advance Trump’s layout in the cryptocurrency market and provide financial support and more development to Bakkt. Chance.

Bakkt's stock price soared 162% on the day of the news and continued to rise more than 15% in after-hours trading. DJT shares followed suit, rising about 16.7%. In addition, Bakkt’s market capitalization before the acquisition was just over $150 million, a valuation based on the company’s financial performance over the past period and the volatility of the crypto market. Although Bakkt’s revenue did not meet expectations (in the three months ended September 30, the company had revenue of $328,000 and an operating loss of $27,000).

From an investment perspective, Bakkt is a company with great potential but still faces challenges. First, Bakkt has unique advantages in compliance and institutional services, especially as institutional investors gradually join the market. Secondly, Bakkt’s stock price has risen sharply recently, mainly due to the Trump Organization’s acquisition intentions. The acquisition will provide Bakkt with more capital and resources, potentially accelerating its growth in the cryptocurrency trading space. However, Bakkt’s past earnings performance has been poor, and its main revenue comes from crypto asset custody and trading services, and the growth potential of these businesses remains uncertain. Therefore, when investing in Bakkt, you need to consider the sustainability of its profit model and the intensity of market competition.

5. Payment concept:

Block (SQ)

A payment service provider established in 2009, formerly known as Square. Square began accepting Bitcoin as a payment method as early as 2014, and the company has been active in the Bitcoin field since 2018. Since 2020, Block has purchased a large amount of Bitcoin for business payments and as a reserve of company assets. Third Quarter Fiscal Year 2024 Financial Report. For the quarter, Block's total net revenue reached $5.976 billion, a solid 6% increase from $5.617 billion in the same period last year. Excluding Bitcoin-related revenue, total net revenue grew to $3.55 billion, an 11% increase year-over-year. Net profit turned from a net loss of US$93.5 million in the same period last year to a profit of US$281 million, a year-on-year increase of 402.1%;

Square business’s strong application support and good Asset reserves, stable cash flow from business and other characteristics make it one of the more stable concepts among many concept stocks. On this basis, influenced by the certain factors that are good for Bitcoin after Trump’s election, Square has achieved 24 in the past half month. % increase.

As a payment concept stock, you can also pay attention to Paypal if you pay attention to Block. As we all know, PayPal is a global payment giant that provides digital payment services to merchants and consumers around the world. They have also shown strong interest in the field of blockchain technology in recent years, and their representative initiatives include the launch of the stablecoin PayPal USD (PYUSD) in 2023. This is an Ethereum-based, U.S. dollar-backed stablecoin that is one of PayPal’s core strategies in integrating digital payments with blockchain. PayPal also made its first blockchain investment using PYUSD, backing Mesh, a company focused on digital asset transfer and embedded financial platforms.

In contrast, Block’s focus in the blockchain field is more focused on Bitcoin, integrating it into payment services and company asset reserves.

6. SummarySummary:

The demand for blockchain concept stocks is growing rapidly and may even exceed the demand for traditional technology stocks and cryptocurrencies themselves. As blockchain gradually expands from initial cryptocurrency applications to a wider range of industry solutions, the market demand for related technologies and infrastructure has also increased significantly. Compared with traditional technology stocks, the growth potential of blockchain concept stocks is more prominent because they not only rely on continuous innovation in technology, but are also closely related to the digital transformation and decentralization trends in the global financial market.

With the maturity of blockchain technology and the optimization of the policy environment, the market prospects of blockchain concept stocks will become increasingly clear. Especially as governments around the world gradually clarify their regulatory policies on crypto-assets, blockchain companies are expected to usher in explosive growth on the basis of compliance. We look forward to more traditional industries beginning to adopt blockchain technology to further promote technological innovation and market demand in this field. Waterdrip Capital will also continue to be optimistic about the long-term development potential of the blockchain field, pay close attention to relevant companies and their technological progress, and actively pay attention. In the next few years, blockchain concept stocks are expected to become the most popular in the global capital market. One of the most attractive investment directions.