6 stocks to invest in crypto mining and long-term metaverse

Important takeaways

• Leaving cryptocurrency and the metaverse entirely out of your portfolio could mean missing out on two of the biggest potential growth markets in a generation.
• A snapshot of META, U, MSFT, RIOT, SQ, NVDA and Q.ai’s bitcoin breakout kit.
• Cryptocurrency and the metaverse are new and untested markets, which means riskier in the short term, but promising for long-term investors. For the bullish, that would mean these stocks could make up 5-10% of your portfolio.

Both metaverse and cryptocurrency have had major setbacks this year. The strengthening US dollar has hit the profit margins of technology companies particularly hard, as these companies tend to do a lot of international business.

On top of this, public enthusiasm for the metaverse and crypto has waned in recent months, as more people step away from their screens and back into the “real world.” The crypto market experienced a crash that disillusioned the general public.

But these hits to the market can make this a good time to buy low if you’re a believer. If the metaverse becomes everything Mark Zuckerburg dreams it will be, the prices to buy into this market are significantly lower than they have been in years.

If crypto recovers or ever becomes mainstream, shares of related companies are currently lower than they have been since before the big crypto rally in late 2020 and early 2021.

If you’re buying into one of these long-term rallying markets, here are some of the best stocks to watch.

META

Naturally, one of the first stocks that comes to mind when it comes to the metaverse is Meta (META). Facebook’s parent company has invested a lot in rebranding and focusing on VR. If Zuckerburg’s judgment can be trusted and the metaverse takes off, you’ll be hard-pressed to find another company that has invested so heavily in becoming the consumer platform of choice.

In the short term, however, Meta’s Reality Labs lost $10.2 billion in 2021 and $5.8 billion in the first half of 2022. It’s important to remember that Meta isn’t just Facebook’s version of the metaverse — it also includes Facebook itself, Instagram, and Whatsapp. Even if VR never takes off, the company is diversified enough that it might be able to take the hit.

The stock took a dive in February 2022 after Apple implemented new privacy measures for iOS users. These changes made it more difficult for advertisers to dive deep into consumer demographics, which is the main reason advertisers are attracted to Facebook’s platform.

The change is estimated to cost the company $10 billion in revenue this year alone. META has yet to recover and put forward a comprehensible strategy in response. If the company can turn around and repair its revenue streams, this could be a good time for long-term investors to consider buying shares.

MSFT

The consumer market is not the only metaverse market. The US military is also getting into AR, and they have contracted with Microsoft to make them into Hololens headsets. Microsoft also has an OS called Mesh – think Windows 10 for XR. With military contracts and one of the leading XR operating systems, Microsoft cannot be ignored as a potential metaverse investment option.

Microsoft has seen its stock prices fall after a rally that lasted nearly two years. Aided by the pandemic, much of the sustained MSFT rally was due to so many companies running their operations remotely, increasing the need for cloud services.

However, the strong US dollar has threatened Microsoft’s projected profits this year, and Hololens was on shaky ground in early 2022, putting the military contract in doubt. While they have since recovered and brought the product up to expectations, the temporary question mark was one of the many factors that caused the drop in investor confidence.

While it is true that MSFT is down compared to this time last year, it is still up compared to pre-pandemic numbers. At the end of December 2019, the stock was trading at just $158.96. Compare that to the current ‘decline’ price of $256.06 at the start of September 2022, and you can see that the company still has relatively good standing in the eyes of investors.

U

Unity (U) makes software that allows developers to build apps. In 2021, there were 5 billion downloads of apps built with Unity software. As the metaverse grows, Unity will take in even more, as the framework is compatible with 3D programming. It also helps app developers run in-app ads.

Unity is another software company that was hit by the strong US dollar. There have also been problems with the algorithm that delivers its ad services, which has led to further price drops. At its peak in November 2021, U traded at $196.65. In September 2022, the price is only $40.79. Since May 2022, it has traded lower than the original September 2020 IPO price.

If Unity can fix its algorithm, this could be a great time to buy into a large company with significant market share. If it can’t, things could get worse from here.

RIOT

Riot Blockchain Inc. is one of the largest Bitcoin miners in America. Cryptocurrency, like any other commodity, is about supply and demand. Should cryptocurrency demand see a resurgence, mining will be an integral part of demand.

Another thing that makes RIOT attractive to certain investors is its efforts to be more “green” than its competitors as its operations are powered by renewable energy.

Perhaps unsurprisingly, RIOT shares sat below $10 until December 2020. As the cryptocurrency frenzy began in late 2020 and early 2021, shares skyrocketed to $71.33. Today, prices have dropped back to $6.33.

In America, cryptocurrency markets remain largely unregulated. That makes any affiliate investment riskier than your typical long-term buy-and-hold stock. However, if crypto ever truly becomes a more mainstream, stable currency, you can see investment in this arena having a huge payoff. However, being able to withstand extreme risks and price fluctuations is a must.

SQ

Square has rebranded itself, and now bears the name Block Inc (SQ). It simplifies many online transactions, and makes great strides in the normalization of cryptocurrency transactions.

For example, Block allows users to transfer money directly, receive paychecks and pay bills with cryptocurrency via the Cash App, and it is making moves to add this functionality to digital wallets at large. It is also involved in mining.

If cryptocurrency becomes mainstream, Block is in a unique position to facilitate these transactions without consumers needing to consciously interact with a third-party intermediary.

SQ is also a slightly safer investment compared to other options such as RIOT, as Block does not exclusively deal with cryptocurrency. It also deals with “real” currencies, so if the crypto market never rebounds, the company may still have room to fluctuate accordingly.

You can track the rise of cryptocurrency in 2020/2021 in SQ’s share prices. At its February 2021 high, SQ traded at $276.57. Before the pandemic, it was trading at $83.33. Today it stands at $66.33 in September 2022. While these are some big swings, Block’s diversified business model is reflected in a much higher base price than many other crypto stocks.

NVDA

Underneath the consumer experience of the metaverse lies technology such as the chips manufactured by Nvidia Corp. (NVDA). Nvidia chips are also widely used by bitcoin mining.

Because the company is so closely tied to crypto mining and metaverse trends, it hasn’t had a good year. It started 2022 at $301.21, and stands at $136.47 as of September 4.

There are several factors contributing to the loss of revenue, and therefore stock value, including the crypto crash, a reduction in consumer demand for gaming systems, and a general lull in excitement across the metaverse.

However, Nvidia is well-rounded, and has made up for some of its losses with a new part of the business dedicated to the production of electric vehicles. If we see a surge in interest in the crypto or metaverse in the future, Nvidia stock is likely to rebound in a big way if it can maintain its position as the primary manufacturer of the underlying hardware.

Managing risk in the cryptocurrency and metaverse markets

Cryptocurrency and metaverse are new and untested markets. That makes them riskier for long-term investors by comparison. But leaving them out of your portfolio could mean missing out on two of the biggest potential growth markets of our generation, depending on how things pan out.

For that reason, you may want to take advantage of investment tools that can help you plan for the long term while also shorting these market segments in case things go south, like Q.ai’s Bitcoin Breakout Kit.

Download Q.ai today for access to AI-powered investment strategies. When you deposit $100, we add another $100 to your account.