This Is One of the Best Blockchain Technology Penny Stocks for 2018
Blockchain Is the Present & Future
Bitcoin. Blockchain. Cryptocurrencies. These are the buzzwords on everyone’s lips today. Investors are going gaga over these purported “get rich quick” investments. While blockchain-based cryptocurrencies have turned out to be the most sought-after investments of our age, there is also a growing interest in cheap blockchain stocks from investors seeking indirect exposure to this space. Read on as I reveal our pick for one of the best blockchain technology penny stocks for 2018.
Why Consider Blockchain Technology Penny Stocks?
When Satoshi Nakamoto first introduced the concept of Bitcoin, it was initially struck off as a phony idea. A computer code creating a currency that was touted to replace fiat currency sounded like a shady concept that could never earn legitimacy. Boy, were we wrong!
Not only did Bitcoin break all stereotypes in the financial world, it ushered in a new era of investing. New breeds of cryptocurrencies took birth—all partially or wholly built upon Bitcoin’s underlying technology called the “Blockchain.”
While it took Bitcoin nearly a decade to earn investor trust, its native technology blockchain managed to garner both popularity and investor interest much earlier. Technology heavyweights like Google/Alphabet Inc (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT), and International Business Machines Corp. (NYSE:IBM) are all investing substantially in the blockchain technology today.
But the growing investor enthusiasm, particularly for this one word, “blockchain,” is astounding. Let me give you an example.
Earlier this month, two new blockchain-focused exchange-traded funds (ETFs) were launched—Amplify Transformation Data Sharing ETF (NYSEARCA:BLOK) and Reality Shares Nasdaq NexGen Economy ETF (NYSEARCA:BLCN). Within just one week of trading, the two funds managed to pull in a whopping $240.0 million in investments! (Source: “Investors rush into new ‘blockchain’ ETFs, pouring in $240 million in a single week,” CNBC, January 26, 2018.)
The demand for the ETFs is solely driven by the use of the word “blockchain.” It’s incredible that many of these investors may not have a clue what blockchain stands for. It’s both surprising and alarming that amid the ongoing hype, all it takes now to boost a stock’s value is to whisper the word “blockchain” and money begins to pour into it.
Perhaps it’s the technology itself or perhaps the term has a nice ring to it, but investor exuberance knows no bounds here. Who could have thought that this singular term could exert so much influence?
To give you an idea, take the example of Riot Blockchain Inc (NASDAQ:RIOT)—a company that came up with a new name, ticker symbol, and business focus just four months ago and saw a 1,000% gain in price by December when cryptocurrency prices peaked.
The company was originally named Bioptix, Inc. and was a loss-making biotechnology company prior to adding “blockchain” to its name. Although its loss-making trend continued following the name-change, its price performance chart completely inverted.
Blockchain-based penny stocks have truly taken off during the recent bull market in cryptocurrencies. In the past three months, during which cryptocurrency prices delivered exponential returns, blockchain technology penny stocks likewise shot through the stratosphere.
During this same period, countless failing businesses have added blockchain to their name to see an instant surge in their stock prices. (Source: “SEC is ‘looking closely’ at companies that dabble in blockchain,” Engadget, January 25, 2018.)
But here’s a word of caution for new investors. Just as cryptocurrencies are extremely volatile, so are these blockchain technology penny stocks.
Most of these penny stocks had their prices tied to cryptocurrencies. Just as the crypto market crashed, these weak blockchain technology penny stocks likewise tanked.
In many cases, we later found out that the insiders had cashed out during the peak of the bull market, leaving naive investors as the ultimate losers. So mind you, not everyone has made money dancing to the tune of “blockchain.” (Source: “CEO of soaring ‘blockchain’ stock sells about $870,000 worth of the shares,” CNBC, January 2, 2018.)
The point here is not to scare investors. The intention is to make you aware of the possible risks of investing in blockchain technology penny stocks.
That said, there are hardly any good blockchain technology stocks left that are still trading for cheap. The majority of the best blockchain stocks have already surged to double-digit levels. But we’ve managed to filter out one stock that could possibly be the best blockchain technology penny stock for 2018.
This Blockchain Technology Penny Stock Could Be a Happy Surprise for Investors
Although this company also changed its name and business focus only recently, its unique nature of business has us rooting for it. The company in question is the Vancouver, Canada-based HIVE Blockchain Technologies Ltd (CVE:HIVE; OTCMKTS:HVBTF). It is a cryptocurrency miner that mines notable cryptocurrencies including Bitcoin, Ethereum, Litecoin, Ethereum Classic, Dash, ZCash, and Monero.
In case you are unfamiliar with crypto mining, it simply involves solving complex equations of the computer code on which cryptocurrencies are built. By solving these equations, the miner is able to unlock rewards or crypto-coins.
Consider it to be the equivalent of gold mining. It’s no coincidence that HIVE was a gold miner prior to changing its business course.
But like gold mining, cryptocurrency mining is a capital-intensive business. Mining consumes a lot of energy and requires expensive, heavy-duty rigs. Electricity and computer hardware make up for the two most significant costs in cryptocurrency mining, which is why individuals and small mom-and-pop miners cannot make the most of this rewarding activity.
HIVE Blockchain Technologies, on the contrary, capitalizes on economies of scale. The company has a ginormous mining setup in Iceland where electricity costs are cheap and temperatures are cool, automatically preventing the hardware from going up in smoke while it runs tirelessly 24/7.
What particularly piques our interest in HIVE is the fact that it is majority owned by the largest cryptocurrency miner in the world—Genesis Mining Ltd. Because of this reason, HIVE gets access to Genesis’ mining resources, including its data centers, its mining expertise, and its experienced team.
This strategic relationship with Genesis has recently helped the company raise over $200.0 million in funding for its expansion initiatives. Part of these expansion plans are already being materialized.
Just two weeks ago, HIVE has announced the completion of the first phase of a mining complex in Sweden. Again, the geography matters. Sweden has cheap and abundant green energy and cold climate—both of which create a conducive environment for mining.
Long story short, HIVE is now at the forefront of the mining industry, growing by leaps and bounds. The company is a vital intermediary in the cryptocurrency space whose contribution to a cryptocurrency’s growth mustn’t be undermined. As long as demand for cryptocurrencies will continue to flourish, the need for mining will likewise grow.
Analyst Take
Investing in blockchain penny stocks can be a very risky wager unless you know the company inside out. There are far too many loss-making sneaky businesses out there beguiling gullible investors by using buzzwords like “blockchain.”
HIVE Blockchain Technologies is one company that has proven its worth in the game. Its relationship with Genesis Mining affords it further legitimacy. This is one company investors should be watching right now because HIVE could turn out to be the best blockchain technology penny stock in 2018.
