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HIVE Stock is Beaten Down Now, But it Could 10X

cryptocurrency, crypto, blockchain
Image source: Getty Images

Written by Chris MacDonald at The Motley Fool Canada

In looking for companies that have the potential to 10x from current levels, certain sectors will receive more outsized interest than others. Indeed, the crypto sector has shown its ability to provide such gains in the past. One such Canada-based crypto company many growth investors focus on is HIVE Digital Technologies (TSXV:HIVE), a top Bitcoin miner.

HIVE generates profitability by mining Bitcoin, or using energy and computing power to solve complex mathematical problems to validate transactions and secure the blockchain, receiving Bitcoin in return. With debt and costs associated in dollars, and revenue in the form of Bitcoin, HIVE stock is essentially a leveraged bet on crypto.

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Thus, for those who think Bitcoin will remain the next big thing in the coming years, and potentially continue to surge higher, this is a company that will continue to receive outsized interest.

Here’s more on why this speculative stock is still seeing so much interest as a potential 10x candidate, even though its stock price has been beaten down so mightily over the past two years.

Bitcoin catalysts entice investors

An upcoming Bitcoin halving, in which mining rewards are cut in half (reducing the amount of new Bitcoin created) tends to lead to higher Bitcoin prices. While we haven’t seen the kind of surge into this event we’ve seen in the past, historically, this provides a big boost for Bitcoin and Bitcoin-related stocks.

If the price of Bitcoin accelerates faster than HIVE’s mining costs, this stock could see disproportionate gains. Of course, speculating on crypto price movements isn’t a game I’m interested in, and many investors may feel the same way. However, we’ve seen the degree to which Bitcoin can surge, and another big uptick could lead to massive upside in this small-cap company.

Continuing to add hash rate

In order for companies like HIVE to mine Bitcoin, computing power (or hash rate) is required. HIVE aims to reach a double-digit hash rate within 2024 to make the most of its improving conditions. Moreover, as the crypto market is down, HIVE continues to acquire next-generation miners at discounted rates to support capacity ahead of Bitcoin’s next sustained explosion. Before reaping outsized profits during acceleration of crypto values, the company aims to maintain cash flow at breakeven production levels.

Bottom line

HIVE stock represents a higher risk option on the TSX Venture exchange and is certainly not an investment for everyone. But for those looking to swing for the fences, and who are very bullish on Bitcoin, this is a levered way to play this trade.

The post HIVE Stock is Beaten Down Now, But it Could 10X appeared first on The Motley Fool Canada.

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Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2024