Pro Research of the Week: Diversify into Bitcoin with this Crypto Miner

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Crypto stocks provide exposure to cryptocurrencies. Our InvestingPro Advanced Watch List includes the best stocks in this category. Among them, CleanSpark is a top pick with good upside potential and solid financial health.

Although cryptocurrencies like Bitcoin have a controversial reputation and are not yet fully regulated, they have gained some prominence in the global financial market.

Some investors view it as a high-potential speculative investment, while others use it as a diversification tool.

Investing directly in the cryptocurrency market can be a challenge. This is why many investors seek exposure to cryptocurrencies through crypto stocks.

These are stocks of companies whose trading activities are tied to the general trend of digital assets, making their stock price correlated with that of cryptos.

Various stocks meet these criteria, including stocks of companies involved in blockchain technology and cryptocurrencies and those that invest in cryptocurrencies.

Additionally, crypto stocks encompass stocks of companies that facilitate access to the cryptocurrency market and those that specialize in cryptocurrency mining.

h2 The best stock to gain exposure to cryptocurrencies/h2

This article provides a comprehensive review of the best options for investors who want exposure to the cryptocurrency market through the stock market.

We’ve carefully selected stocks and compiled them into an InvestingPro Advanced Watchlist.

Our analysis includes an assessment of analyst targets, the overall Financial Health Score and the InvestingPro Fair Value, which combines various established financial models.

Source: InvestingPro, Watchlist screen

The list includes:

Block (NYSE:SQ) (payments and financial services) Marathon Digital Holdings (NASDAQ:MARA) (blockchain technology and mining) HIVE Blockchain Technologies (NASDAQ:HIVE) (mining) CleanSpark (NASDAQ:CLSK) (sustainable crypto mining) Greenidge Generation Holdings (NASDAQ:GREE) (energy, mining and data center) MicroStrategy Incorporated (NASDAQ:MSTR) (treasury bitcoin investments) Coinbase Global (NASDAQ:COIN) (one of the world’s leading crypto trading platforms )

When studying the profiles of these companies on InvestingPro, one immediately notices their low financial health scores, classified as “fair” or “weak”.

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Investing in crypto stocks therefore carries risks, requiring a careful allocation of a limited part of your portfolio.

Most of these stocks, with the exception of Coinbase, are undervalued by analysts, with one even considered a “bargain”.

Regarding Fair Value, which assesses cash flows, only two stocks are undervalued and have significant upside potential: CleanSpark and Greenidge Generation.

Greenidge has a phenomenal upside potential of 590%, according to analysts, and 49.6%, according to InvestingPro. However, its “weak” financial health score calls for caution.

Therefore, our top pick is CleanSpark, offering upside potential of 28.3% according to InvestingPro and 62% according to analysts, with a “fair” financial health score.

Business model of h2 CleanSpark/h2

CleanSpark primarily generates revenue through its Bitcoin mining operations. However, the company sets itself apart by prioritizing sustainability and investing in clean energy sources.

Specifically, the company engages in sustainable Bitcoin mining by selecting locations with strong low-carbon energy portfolios and participating in renewable energy credit programs.

It also develops advanced energy technology solutions for commercial and residential customers.

The Nevada-based company operates four Bitcoin mining facilities in Georgia and has established partnerships with other miners in upstate New York.

With investors’ increasing focus on environmental preservation, the company’s commitment to clean mining is becoming a significant advantage.

Additionally, as a bitcoin miner, CleanSpark’s earnings should closely align with fluctuations in the price of bitcoin, making it an attractive option for those looking for direct exposure to crypto movements.

h2 CleanSpark key financial indicators/h2

CleanSpark’s revenue surged in 2021 during Bitcoin’s bull market and remained flat despite the cryptocurrency’s steep fall in 2022.

Source: InvestingPro, on-screen charts

As the business requires heavy investment in equipment, debt is also a factor.

Source: InvestingPro, on-screen charts

And although the company started to take on debt in 2022, it remains quite reasonable to date, amounting to only 4.6% of the capital according to the latest quarterly results published.

h2 Conclusion /h2

CleanSpark presents an attractive opportunity with its direct correlation to Bitcoin, strong revenue growth and low leverage. Analysts and valuation models also point to significant upside potential for the stock.

Nevertheless, it is crucial to recognize the inherent risks associated with cryptocurrency investments. Investors should exercise caution, maintain a diversified portfolio and allocate only a small portion to these stocks.

InvestingPro tools help savvy investors analyze stocks, as we have done in this article. By combining the insights of Wall Street analysts with comprehensive valuation models, investors can make informed decisions while maximizing their returns.

Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, opinion, investment advice or recommendation as such, nor is it intended to encourage the purchase of assets in any way. I remind you that any type of asset is evaluated from several points of view and presents a high level of risk. Therefore, any investment decision and the associated risk remain the responsibility of the investor.

Written by: Investing.com

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