As cryptocurrency gains more traction in the global trading marketplace, it’s logical to see an evolution of sorts when it comes to investment approaches and strategies. One such evolution in the world of Bitcoin, Ethereum, and other digital currencies is the trading of cryptocurrency stock.
What does that mean? If you’re new to digital currency you likely have heard more about purchasing, holding, and trading Bitcoin and others like it directly; paying money to receive the keys for the currency and maintaining those keys until you sell, trade, or use the cryptocurrency to make a purchase.
Cryptocurrency stocks are an obvious next step in the investment options you have with digital currency.
What Are Cryptocurrency Stocks?
A company that deals in Ethereum or Bitcoin may or may not be involved in helping you buy, sell, or trade those coins. As mentioned above some companies are vested in crypto infrastructure rather than crypto itself.
Those who deal directly with these currencies and those who are more focused on infrastructure may (or may not) have an IPO you may invest in. Those with a listing on a publicly traded exchange may allow you to buy stock in the company allowing them to further their activities mining, providing an exchange, or some other related aspect of the industry.
Another way of looking at this–not all companies that deal in crypto are publicly traded; not all companies that are involved in crypto that ARE publicly traded offer you the ability to buy, sell, or trade coins themselves.
One example? NASDAQ.com describes one cryptocurrency stock (Marathon Digital Holdings) as follows:
“Marathon Digital Holdings is a cryptocurrency company that focuses on building the largest mining operation in North America with one of the lowest energy costs. In essence, it helps investors gain exposure to Bitcoin in their portfolios without having to deal with the complications of holding the asset directly.”
In other words, you can invest in Bitcoin, or you can choose to invest in the companies that support the infrastructure that mines and supports cryptocurrency.
You can always do both, but the nuances of investing in one may not apply to the other. There may be a separate learning curve for each type of investing–give yourself enough time to learn the ropes.
What follows are descriptions of companies that are publicly traded and are listed on stock exchanges–companies that sell stock to support their operations of mining virtual currency (rather than offering to sell it directly to you).
Coinbase is a cryptocurrency trading platform rather than a Bitcoin mining operation. Its role as a part of virtual currency infrastructure has led it to more than $460 billion in quarterly trading with more than 2,000 workers in hundreds of locations.
Coinbase made its first stock listing in April 2021. Investment-oriented websites declared the company’s initial public offering as a major development in the evolution of virtual currency.
However, the company has come under the scrutiny of the Securities and Exchange Commission for a program called Coinbase Lend, which (until canceled by the company) promised to help users “earn crypto by holding crypto”.
DeFi Technologies describes itself as a company dedicated to building and managing assets “in the rapidly emerging decentralized financial market, providing institutional and retail investors easy access to previously unseen returns”.
DeFi is described by others as a digital asset investment firm. Toronto-based DeFi is formerly known as Routemaster Capital Inc. and rebranded as DeFi Technologies Inc. in early 2021.
Marathon Digital Holdings bills itself as working to build “the largest mining operation in North America”. This company has seen some Bitcoin-like financial gains to the tune of 1,400% according to NASDAQ.com.
Its operation is focused on crypto mining using the blockchain system. The buzz about Marathon includes noting that while Bitcoin rose at one time up to roughly 334%, Marathon’s growth surged some 3000% according to some sources over a one-year period.
MicroStrategy is considered a big player in business analytics and intel. This company is not mining crypto but rather acquires it as part of its overall assets. At one point the stock shot up well above 300%; a MicroStrategy CEO is quoted saying the company seeks to acquire more than 100,000 Bitcoins currently held by the company.
Robinhood has made a name for itself in the crypto space by offering a cryptocurrency-centric wing of its business. Headquartered in Menlo Park, California, Robinhood has offered traditional stock services but expanded its operations into the virtual currency world. Robinhood’s features include app-based financial services featuring zero minimums and no commissions.
This was quite the innovation when it debuted, and it’s not surprising that Robinhood Markets has branched out into virtual currency.
The company remains dedicated to commission-free transactions even with Bitcoin and others; the official site includes a blurb that reads, “If you buy $100 worth of crypto, you should get $100 worth of crypto.” In one year, this company’s revenues jumped from some five million to well over $230 million.
RIOT Blockchain, a direct competitor of Marathon Digital Holdings, this company aims to do the same thing–rapidly scale up Bitcoin blockchain mining operations in the USA. RIOT hosts its mining in New York–an operation that started with some four thousand Bitcoin miners in February 2020 and has consistently added literally thousands more ever since.
In the first several months of 2021 some nine thousand more miners were deployed as well. A bit later, a whopping 40,000-plus were added for a total of just under 60,000 people working to mine Bitcoin for RIOT Blockchain.
Voyager is a publicly-traded company featuring a cryptocurrency trading app. The feature that may appeal to many–especially those new to buying and selling virtual currency is the Voyager Earn program which offers rewards on certain assets for those who maintain a minimum monthly balance.
Those rewards are offered on both Bitcoin and Ethereum as well as Polkadot, Voyager Token, Aave, and Dash, just to name a few. The rewards offered are determined based on daily averages, and rewards are paid monthly.
ProShares Bitcoin Strategy ETF ($BITO) The first U.S. ETF to provide investors with exposure to Bitcoin futures. BITO does not invest directly in Bitcoin Instead, it invests in cash-settled, front-month Bitcoin futures – contracts with the shortest time to maturity.
Valkyrie Bitcoin Strategy ETF ($BTFD) Originally called $BTF until many in the crypto community pointed out that it should be $BTFD. That acronym stands for, “buy the f*&%ing dip,” a trading strategy has typically been successful with respect to the cryptocurrency. Similar to BITO, BTFD invests in bitcoin futures.
Things To Remember About Cryptocurrency Stocks
The buying, selling, and trading of stocks offered by cryptocurrency companies is highly regulated. When you buy crypto stock, you are purchasing an interest in a company that deals in virtual currency. You are not purchasing the virtual currency itself when you make a buy on a stock market exchange that involves the IPO of the company.
You must purchase Bitcoin or Ethereum or other virtual currency on crypto exchanges. Do not assume that purchasing publicly traded STOCK is the same thing as owning or buying crypto.
Virtual currency is not as regulated in America as stocks, bonds, and other financial instruments. Your risk of loss is elevated with cryptocurrency for this reason and for many others.
Joe Wallace has covered real estate and financial topics, including crypto and NFTs since 1995. His work has appeared on Veteran.com, The Pentagon Channel, ABC and many print and online publications. Joe is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News.