Bitcoin (BTCUSD) has been on an absolute tear in 2023, with prices rising more than 160% year-to-date. Valued at over $850 billion by market cap, the world’s largest cryptocurrency is now among the top 10 most valuable assets globally.
Despite its astonishing rise this year, BTC prices are still down over 30% from all-time highs. But there are several key drivers for Bitcoin in the near term which should allow it to deliver outsized gains in 2024.
First is the possible launch of several spot exchange-traded funds (ETFs) by institutions such as BlackRock (BLK), Invesco (IVZ), and Ark Invest. The inflow of institutional funds should drive demand for the digital asset, allowing it to gain momentum before the halving event expected during the second quarter of 2024. The amount of rewards distributed to miners is reduced by 50% every four years, and this “halving” event has historically resulted in a massive spike in prices.
Keeping these factors in mind, here are three standout blockchain stocks to buy ahead of Bitcoin’s big year.
Bit Digital Stock
Valued at $273 million by market cap, Bit Digital (BTBT) is a Bitcoin mining and Ethereum (ETHUSD) staking company. It reported revenue of $11.6 million in Q3 after mining 403.1 Bitcoins in the quarter. It also earned close to 140 Ethereum tokens via staking.
Bit Digital ended the quarter with $22.1 million in cash and $108.7 million in total assets. Its treasury holdings of BTC have grown to 802.8 or $22.1 million, while its ETH position stands at 13,783.4 or $23 million as of Q3.
The two analysts covering BTBT both have a “strong buy” rating, with an average price target of $4.75 - indicating an upside potential of 38% from current levels.
Cipher Mining Stock
Cipher Mining (CIFR) develops and operates bitcoin mining data centers and aims to strengthen the network’s critical infrastructure. It completed the build-out of a facility at Odessa, deploying up to 7.2 EH/s of self-mining capacity across four data centers.
Cipher also executed an agreement to acquire a new site in Texas with approval for up to 300 MW of energy consumption. Moreover, the company purchased 1.2 EH/s worth of Bitmain S21 rigs for $14/TH for delivery beginning in Q1 of 2024.
Out of the seven analysts covering CIFR, five recommend “strong buy,” one recommends “moderate buy,” and one recommends “hold.” The average target price for CIFR is $5.17, indicating an upside potential of 93.6%.
Bitfarms Stock
The final Bitcoin stock on my list is Bitfarms (BITF), valued at $634 million by market cap. In Q3 of 2023, the company reported revenue of $35 million, an adjusted EBITDA (earnings before interest, tax, depreciation and amortization) of $7 million, and a net loss of $19 million.
It sold 1,018 BTC at an average price of $27,900 for total proceeds of $28 million, a portion of which was used to reduce balance sheet debt of $6 million. It also fully utilized miner manufacturer credits of $19 million with the purchase of hydro containers and miners.
Over the years, Bitfarms has invested in new facilities and miner upgrades, allowing it to expand mining capacities. The introduction of higher-efficiency, lower-priced miners should help it capitalize on competitive pricing for equipment upgrades.
Out of the four analysts covering BITF, three recommend a “strong buy,” and one recommends a “moderate buy.” The average target price for BITF is $3.69, indicating an upside potential of 79%.
