3 Bitcoin Shares Expected To Increase Sales From 522% To 21.551% By 2023

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Since the turn of the 20th century, stocks have generated the highest average annual return among popular investment vehicles, such as bonds, gold, and other commodities. But in the short term, cryptocurrencies have overtaken the stock market on several occasions.

Bitcoin (CRYPTO: BTC) is leading the charge. The value of the world’s largest digital currency by market cap fell from $ 0.0008 (or eight hundredths of a dime) in early July 2010, to a peak of over $ 68,000 per coin. For those of you keeping the score at home, Bitcoin has generated over 8,000,000,000% return since its inception.

However, this increase in cryptocurrencies, especially Bitcoin, is also fueling the growth of some companies. According to Wall Street consensus estimates, the following three Bitcoin stocks are expected to generate stunning sales growth ranging from 522% to 21,551% over the next three years.

Image source: Getty Images.

Coinbase Global: Consensus sales growth of 522% by 2023

Perhaps it’s no surprise that one of the fastest growing companies on the planet over the next three years is the leader in the cryptocurrency exchange and ecosystem Coinbase Global (NASDAQ :CORNER). After recording $ 1.28 billion in sales in 2020, Wall Street is looking to get Coinbase to surpass $ 7.9 billion in sales by 2023. This represents a 522% increase in revenue in just three years.

Bitcoin and Ethereum account for the bulk of Coinbase’s trading revenue. The company is primarily relying on the social media buzz to entice new and existing customers to buy or trade Bitcoin. Considering that Coinbase had 7.4 million monthly transaction users (MTUs) in the third quarter, more than triple the MTUs of last year, the company appears to be doing a good job of wooing new investors.

Coinbase is probably also boosted by the legitimization of Bitcoin, to some extent. In September, El Salvador became the first country to officially legalize the world’s leading cryptocurrency as a tender. If businesses are more accepting of Bitcoin and governments are more tolerant of its use, the demand for Bitcoin could increase.

However, I would be remiss if I did not point out that Coinbase faces many challenges. For example, the barrier to entry into the crypto brokerage space is virtually non-existent. Even though Coinbase is the clear leader in crypto in terms of verified users (73 million) and assets ($ 255 billion held on its platform), it wouldn’t be difficult for a competing exchange to cut fees. charged by Coinbase. This competition on fees is ultimately what has led to commission-free transactions with traditional brokerage firms.

Additionally, since most cryptocurrency investors are young or new to investing, they might have a surprise next year when they learn the rules of blank selling or have to pay taxes on their capital gains. This could negatively affect the frequency of trading in 2022.

While Coinbase is expected to experience incredible growth through 2023, there doesn’t appear to be a moat that would command a premium valuation.

Image source: Getty Images.

Riot Blockchain: Consensus Sales Growth of 5,057% by 2023

Another Bitcoin stock that is expected to generate meteoric sales growth over the next three years is cryptocurrency miner Riot Blockchain (NASDAQ: RIOT). After the roughly $ 12 million in revenue announced by the company last year, Wall Street hopes Riot will reach $ 623 million in annual revenue by 2023. This is just your ordinary increase. of 5,057% of sales.

For those unfamiliar with cryptocurrency mining involves a person or business using powerful computers to solve complex mathematical equations that validate groups of transactions (i.e. a block) on a digital ledger, known as blockchain. The first user to validate a block receives a block reward, which for Bitcoin is 6.25 tokens. This equates to almost $ 400,000 in value per block reward.

For crypto miners like Riot Blockchain, size and efficiency matter. The company was a busy bee in 2021, in terms of mining equipment orders. In April, the company announced a $ 138.5 million order for 42,000 S19j Antminers, and recently added a $ 54 million order for 9,000 S19j Pro miners. Riot Blockchain is expected to have all 90,150 of its miners operational by the fourth quarter of 2022.

The company is also spending aggressively to deploy immersion cooling technology. Riot notes that immersion-cooled miners perform more efficiently, which means better production and a greater likelihood of beating others at the punch when it comes to earning Bitcoin block rewards.

While it might seem like an overwhelming investment idea, Bitcoin miners could be the worst way to invest in the world’s best digital currency. For example, companies like Riot rely almost entirely on external factors rather than innovation.

Additionally, Bitcoin block rewards are halved every four years. Unless the price of Bitcoin continues to soar, the potential for return will decrease over time.

Image source: Getty Images.

Marathon Digital Holdings: Consensus sales growth of 21,551% by 2023

The crème de la crème of the expected earnings growth among Bitcoin stocks comes from Marathon Digital Holdings (NASDAQ: MARA), which is another cryptocurrency mining company. With annual sales expected to skyrocket from around $ 4.4 million to $ 944 million in just three years, Marathon will in fact sprint to achieve overall revenue growth of 21,551%.

Marathon Digital and Riot Blockchain’s expansion strategy is similar, except for two points. First, while Riot plans to cap its miner fleet at 90,150 units by the fourth quarter of 2022, Marathon Digital will have a larger fleet of miners deployed by the middle of next year. The Marathon fleet will be made up of just over 133,000 miners, of which more than 42,000 have been received and are awaiting deployment. According to the company, it began chartering planes in October to help alleviate some logistical issues that have affected deliveries around the world.

The second key difference between these two companies is that Marathon also directly acquired Bitcoin as an investment. Although both companies hang on to the Bitcoin they mine, Marathon made a $ 150 million investment in January that earned the company 4,812.6 Bitcoin (roughly $ 31,168 per token). With Bitcoin doubling in value since that purchase, Marathon is sitting on an unrealized gain of around $ 150 million.

But even with its larger fleet and stronger balance sheet holding 7,453 Bitcoins (as of November 1), Marathon faces a number of hurdles that could derail its business. In addition to halving Bitcoin block rewards every four years, there is also no barrier to entry into the crypto mining space. In short, the competition steadily increases as the bulk rewards decrease over time.

With Marathon on Bitcoin’s heels, rather than relying on innovation like a traditional business, this seems like a very risky investment.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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