Michael Saylor’s Strategy (MSTR) is no longer the only company buying and hoarding large amounts of Bitcoin (BTCUSD) and other cryptocurrencies. Dozens of companies are now playing the crypto treasury game. Shareholders who were once uneasy with these crypto investments are happy with the results as crypto keeps delivering stellar returns. In fact, even the U.S. government itself has a strategic crypto reserve following an executive order from President Donald Trump, making it the largest state holder of BTC.
Swapping a slice of idle dollars for crypto can massively increase returns and give the company a more “techy” reputation
So is it worth chasing the next firm that vows to turn itself into a Bitcoin or Ethereum (ETHUSD) piggy bank? The honest answer is that it depends, and the details matter more than the ticker.
Some managements treat the crypto as a long-term reserve, funding it with genuine profits and pledging to hold through drawdowns. Others see it as a financing gimmick to raise cheap equity today and dump later.
Here are three hot stocks that are building out their crypto reserves.
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BitMine Immersion Technologies (BMNR) is a Bitcoin mining company that specializes in small immersion-cooled data centers. The company mines Bitcoin for other third-party companies alongside its own mining operations and sells mining equipment on the side. It has just seven full-time employees.
The stock popped in late June after BitMine announced it would raise $250 million via private placement to buy Ethereum to adopt an “Ethereum treasury” strategy.
The goal is to eventually become the MicroStrategy of Ethereum by acquiring and staking 5% of the global ETH supply. This will make it the largest single ETH holder.
The company currently holds 625,000 ETH and 172 BTC, plus unencumbered cash of $401.4 million. In total, that’s $2.77 billion. If you want outsized returns, it’s worth buying. ETH has just started to outperform BTC, and many think a powerful altcoin cycle can happen this year. BitMine’s stock could balloon if ETH breaks through $5,000 or more.
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CEA Industries (VAPE) was a Canadian vape company (hence the ticker), but it has recently aggressively pivoted to crypto. It announced a $500 million raise through a private investment in public equity (PIPE) deal.
The majority of that will go towards buying and holding Binance Coin (BNBUSD), the native crypto of the Binance chain. It is also used on the Binance exchange. The deal attracted over 140 institutional and crypto-native investors, including 10X Capital, YZi Labs, Pantera Capital, Blockchain.com, Arche Capital, and GSR, among others.
VAPE stock is up 330% in the past five days as a result of this deal. The market cap is still quite small at $34.5 million. That small market cap is reasonable despite the big investment amount, as outstanding warrants of $750 million can massively dilute investors if exercised.
The long-term payoff is still uncertain, but it’s a good stock to put into a high-risk, high-reward portfolio. VAPE’s valuation is now tied almost entirely to the market’s enthusiasm (or fear) toward BNB, which just set new all-time highs. BNB will be one of the biggest beneficiaries if an altseason happens and trading activity explodes.
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Bit Origin (BTOG) is another crypto mining and blockchain infrastructure company. It is now focusing on building a large digital asset treasury, with Dogecoin (DOGEUSD) as the core asset.
Bit Origin announced a $500 million funding plan and the acquisition of over 40.5 million Dogecoin ($8.9 million). This made it the first publicly traded company on a major U.S. exchange to formally accumulate Dogecoin as a core treasury asset.
BTOG is up 150% in the past month as traders are betting aggressively on crypto stocks. There are also hopes for potential Dogecoin adoption in payment systems and a major network upgrade.
However, I think BTOG is not a buy at the moment. DOGE has fewer use cases and is a less-established crypto vs. ETH and BNB. It is also very inflationary. On top of that, BTOG itself is trading at $0.39, which is less than the Nasdaq minimum of $1. A reverse split may be ahead soon to help the company maintain its listing.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
