3 Crypto Stocks to Buy as Bitcoin Trends Higher

Year to date, Bitcoin (BTC-USD) is up around 40%. And hopefully this rally marks the end of an extended crypto winter for coins and related crypto stocks. To help, there are reasons to be bullish on Bitcoin. Firstly, there is a high probability of a recession this year. Contractionary monetary policy is likely to end and the dollar may continue to weaken. This is good news for risky asset classes. In addition, cryptocurrencies can see a large influx of money after a massive correction. Furthermore, Bitcoin is to be halved in 2024. In the past, the event has been associated with a meaningful rally in the cryptocurrency blue chips. The next 12-24 months are therefore likely to be positive for the crypto world.

Let’s talk about three crypto stocks that can potentially deliver multi-bagger returns.

Crypto Stocks: Riot Platforms (RIOT)

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Riot Platforms (NASDAQ:RIOT) is up 82.2% so far this year. The rally from highly oversold levels is likely to continue if Bitcoin continues to trend higher. It is worth noting that Riot has continued to increase its mining capacity throughout the industry downturn. As of January, the company reported a hashrate capacity of 9.3EH/s. The company plans to increase capacity to 12.5EH/s within the first half of the year. Riot is also attractive in terms of balance. As of Q3 2022, the company reported cash and equivalents of $255 million and zero debt. During the same period, Riot had 6,897 Bitcoin holdings. With strong financial flexibility, the company is positioned to accelerate growth if the crypto recovery continues.

I must add here that Riot reported a gross margin of 65.4% for the first nine months of 2022. Assuming a scenario where Bitcoin trades above $35,000, the company is positioned to deliver a healthy EBITDA margin.

Coinbase (COIN)

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After a challenging 2022, Coin base (NASDAQ:COIN) skyrocketed by 90% so far this year. If crypto trading activity picks up in the coming quarters, COIN stock will remain in an uptrend. For 2022, Coinbase reported revenue of $3.1 billion. For the same period, the company’s adjusted EBITDA loss was $370 million. While total revenue fell significantly, Coinbase reported 53% growth in subscription and services revenue to $792.6 million. Based on Q1 2023 guidance (annualized), Coinbase is positioned to report revenues in excess of $1.2 billion from this segment.

Coinbase Prime, for institutional investors, is another potential growth catalyst for market recovery. It’s also worth noting that Coinbase ended Q4 2022 with cash and equivalents of $5.5 billion. The company has navigated through the crisis period with a strong balance sheet. This provides flexibility for platform development and potential international expansion in the coming years. Coinbase intends to launch “basic products that are a gateway to Web3 and crypto in all countries.”

Bitfarms (BITF)

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Bit farms (NASDAQ:BITF) is up approx. 120% so far this year and remains attractive. It is worth noting that Bitfarms mined 1,515 Bitcoins in Q3 2022. What is more important is the fact that the company lowered its production costs to $9,400 per Bitcoin. Even with depressed sentiments, the company managed to generate positive operating cash flows. Furthermore, for Q3 2022, the company’s hash rate was 4.2EH/s, which was up 180% year-over-year. The company guided to close 2022 with a hash rate of 6.0 EH/s.

Therefore, with continued growth in mining capacity, the outlook is bright for 2023. Considering production costs, Bitfarms is positioned to report strong OCF in the coming quarters. Another big positive for Bitfarms is the history of deleveraging. Compared to levels in June 2022, the company has reduced its debt by 80% from February. With $25 million in debt, the company has a strong balance sheet and is poised to sustain aggressive growth.

At the date of publication, Faisal Humayun 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 author, subject to the InvestorPlace.com Publishing Guidelines.