Cryptocurrency markets cooled in 2022 as rising interest rates, regulatory challenges, and other macro headwinds pushed investors toward more conservative investments.But over the past year, the crypto market has reignited as the U.S. Securities and Exchange Commission (SEC) approved the first spot price. Bitcoin Exchange traded funds (ETFs) and investors were expecting interest rates to fall.
The upcoming Bitcoin “halving” will reduce the rewards for cryptocurrency mining.network upgrade Ethereum wire; and an increase in crypto purchases by institutional investors has also brought back more bulls.
The easiest way to profit from market growth is to buy top cryptocurrencies like Bitcoin and Ethereum directly on a crypto exchange. However, it is still wise to invest in a small number of promising crypto companies that will benefit from the same tailwinds.i believe marathon digital (NASDAQ:MARA) and coinbase global (NASDAQ:Coin) Check all the correct boxes.
1. Marathon Digital
Marathon Digital is the largest pure Bitcoin miner in North America. The company minted 12,852 Bitcoins in 2023, an increase of 210% from 2022. As of the end of March, it held 17,381 Bitcoins, out of a total holding of $1.6 billion in Bitcoin and cash.
Marathon's mining operations in North Dakota were affected by severe weather during the first quarter of 2024. But the company plans to solve these problems by relocating some miners from North Dakota to Texas and providing energy to thousands of new miners. After making these changes, the company expects its fleet to increase to 235,000 miners this year, with a total production capacity of 29.8 exahash per second (EH/s). By comparison, the marathon's closest competitors are riot platformended March with 112,944 miners, a production capacity of 8.6 EH/s, and only 8,490 Bitcoins on the balance sheet.
Marathon and Riot's lead should grow further with the opening of new factories, the acquisition of small-scale miners and the expansion of a new mining joint venture in Abu Dhabi. It also regularly sells its own Bitcoin to raise more cash and support these expansion plans.
Analysts expect Marathon's revenue to grow at a compound annual growth rate (CAGR) of 35% from 2023 to 2026. We expect adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at a slower CAGR of 1%. Despite increasing spending to scale, the company's stock still looks reasonably valued at six times this year's sales and 13 times adjusted EBITDA.
2. Coinbase Global
Coinbase is one of the world's largest cryptocurrency exchanges. It has $101 billion in assets at the end of 2023 and was selected as the custodian for eight of the 11 new Bitcoin spot price ETFs listed earlier this year. While many of its competitors went bankrupt, the company prospered.
Coinbase's total trading volume declined by 44% in 2023, but continued to increase in the third and fourth quarters as the crypto market re-energized.In addition, much of the trading income tether Stablecoins accounted for 11% of trading volume in 2023, and their transition could reduce long-term dependence on Bitcoin, Ethereum and other more volatile crypto assets.
Analysts expect Coinbase's revenue to grow at a CAGR of 21% from 2023 to 2026 as Adjusted EBITDA grows at a CAGR of 40%. Based on these estimates, the company's stock trades at 10 times this year's sales and 24 times adjusted EBITDA.
Coinbase stock is not yet a bargain, but the stock may still have plenty of room to play as the cryptocurrency market expands. Ark Invest's Cathie Wood (who believes Bitcoin's price could reach $1.5 million within the next three years) lists Coinbase as one of Ark Invest's most popular ETFs. This is why we hold it as a top holding stock. If you believe cryptocurrencies will gain more attention from retail and institutional investors, you should follow Ark's lead and pick up a few shares of Coinbase.
Should you invest $1,000 in Marathon Digital now?
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Leo Sun has no position in any stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
2 Potentially Explosive Crypto Stocks to Buy in April was originally published by The Motley Fool
