The recent sell-off in a number of top blockchain stocks presents a compelling opportunity for long-term investors. While Bitcoin (BTC-USD) has soared to new highs, shares of companies with blockchain exposure have lagged significantly. Some have even declined recently, despite their balance sheets continuing to improve alongside the rising price of Bitcoin.
This disconnect has created a unique window to buy blockchain stocks at a discount compared to their underlying crypto asset holdings. As we know, it takes time for Wall Street to fully recognize the value of crypto, blockchain, and Bitcoin-related businesses. Once institutional investors realize the immense discount these stocks are trading at relative to their assets, prices should surge toward their intrinsic value.
Accordingly, now may be an ideal time to take a position before these stocks catch up. With the Bitcoin halving fast approaching, some fear businesses involved with crypto and mining will suffer. But I believe Bitcoin prices are unlikely to ever fall below $40,000 post-halving. Mining companies have been aggressively expanding capacity, and spot Bitcoin ETFs have seen billions in inflows, creating a supply crunch.
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) recently announced strong February 2024 production and operations updates. The company produced 418 Bitcoin last month, showcasing its robust mining capabilities even in a turbulent market. While some miners are struggling due to higher mining difficulty rates, Riot’s production highlights its resilience and potential to thrive long-term. This company also makes use of energy subsidies to make its net Bitcoin mining cost one of the lowest in the industry.
Furthermore, Riot continues expanding and optimizing its operations. The company recently purchased more than 30,000 additional Antminer units from MicroBT. The company is proactively boosting its self-mining abilities, and this huge miner order demonstrates Riot’s confidence in its future growth prospects despite current industry challenges.
I believe with ambitious infrastructure scaling plans underway, Riot seems poised to increase efficiency and hash rate substantially. That should lift up the share price, to say nothing of the company’s 8,067 BTC stash that should skyrocket in value.
Bitfarms (BITF)
Bitfarms (NASDAQ:BITF) also reported strong Q4 2023 results, mining over 1,200 Bitcoin for the quarter. Despite the ongoing crypto bear market, Bitfarms increased its Bitcoin production and improved mining margins compared to Q3 2023. Impressively, the company’s gross margin also increased from 38% to 52% in just one quarter! This is a testament to Bitfarms’ increasingly impressive operational efficiency.
Additionally, Bitfarms achieved a major balance sheet milestone by eliminating its debt in February 2024. This enhanced financial flexibility will allow Bitfarms to invest in further growth initiatives, like its expansion projects in Paraguay. Bitfarms is also installing thousands of new, high-efficiency miners in 2024 to significantly boost its hash rate. I believe BITF stock will rise significantly in line with other blockchain stocks in the coming months.
TeraWulf (WULF)
TeraWulf (NASDAQ:WULF) posted preliminary 2023 results and impressive 2024 guidance. For 2024, TeraWulf expects revenue of approximately $69 million, a massive increase over 2022 revenue of just $15 million. That is alongside robust profitability growth. The company’s outlook seems very compelling, with industry-leading cost projections of approximately $25,000 per Bitcoin pre-halving, leading to substantial debt repayment.
TeraWulf plans to continue expanding its mining infrastructure, targeting 300 MW capacity by the end of 2024. The company has already boosted its Lake Mariner facility to 160 MW. This rapid organic growth allows TeraWulf to increase scale efficiently.
The company is making major headway on debt reduction, lowering its debt obligations by more than $50 million since last June. Its balance sheet is now in a solid position, and I believe it is only a matter of time before we see the stock trend much higher.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.