Why is Bitcoin increasing?
Some investors may remember the boom-bust cycles Bitcoin went through in the past. In 2017, the popular digital currency jumped 1745% in just a few months. Ultimately, the digital currency collapsed to US $ 3,400 at the end of 2018.
This time around, the market is much more mature and some savvy investors are getting involved. The reason Bitcoin is booming is because institutional investors are starting to recognize the value of this digital currency. Hedge fund legends like Stanley Druckenmiller and Paul Tudor Jones have invested in it this year.
Meanwhile, tech giants such as Square and Pay Pal have added cryptocurrencies to their platforms and balance sheets. This surge in demand from tech giants and professional investors is probably why Bitcoin is booming again.
Invest in Canadian Bitcoin Stocks
Canadians can probably buy Bitcoin directly through their regular trading app. However, investors looking for an extra layer of security could invest in a Bitcoin mining stock instead.
Technologies HIVE Blockchain (TSXV: HIVE) is a good example. The stock is up 622% year-to-date, closely following the rise in Bitcoin’s value. The company owns and operates server farms that generate Bitcoin by solving complex mathematical puzzles (a process called mining).
Over the years, HIVE has generated BTC and Ethereum worth millions of dollars. The company is selling some of these freshly generated cryptocurrencies to fund its expansion. Currently, it operates facilities in Canada, Sweden and Iceland.
However, the company also keeps some of the cryptocurrency as long-term investments. As of September 2020, HIVE would have US $ 18.3 million (C $ 24 million) in cash, Bitcoin, Ethereum, and other digital currencies on its books. As the value of cryptocurrencies grows, this reserve is expected to grow along with it.
This is what makes HIVE such a good proxy for Bitcoin and the cryptocurrency space.
Another proxy is Hut 8 Mining (TSXV: HUT). Unlike HIVE, Hut operates only in Canada – specifically in Alberta. The company has mined a total of 12,305 Bitcoins since its inception and has held over 3,496 of them. At the current market price, the company’s cryptocurrency reserves are worth US $ 62.9 million or US $ 82.3 million. Canadian dollars. Meanwhile, the company’s market capitalization is $ 130 million.
Hut 8 is probably a overlooked opportunity for investors looking for Bitcoin exposure.
Bitcoin is booming again. The interest of hedge fund legends and tech giants is likely driving this latest boom. Canadian investors can add overlooked Bitcoin mining stocks such as HIVE or Hut to gain exposure.
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Fool contributor Vishesh Raisinghani owns Bitcoin and Ethereum. Tom Gardner owns shares of Square. The Motley Fool owns stock and recommends PayPal Holdings and Square and recommends the following options: Long January 2022 $ 75 calls to PayPal Holdings.