As the global financial regulatory environment gradually becomes clearer, the cryptocurrency market is transitioning from a “niche circle” to the mainstream financial system. After the U.S. presidential election, Trump’s election had a positive impact on the cryptocurrency industry, as he promised to adopt more friendly regulatory policies, including establishing a national Bitcoin reserve and encouraging the U.S. to expand Bitcoin mining activities. These promises boosted market confidence. In the following days, a widespread transmission began in the capital markets, leading to a general increase in multiple blockchain concept stocks.

Currently, an increasing number of listed companies have recognized the immense potential of blockchain technology and are actively incorporating it into their strategic plans. Many companies in the blockchain concept stock sector are showing strong growth momentum, attracting significant attention and investment in the market. By integrating blockchain technology, these companies have driven digital transformation and value creation, gradually becoming important players in the industry. We have closely monitored several stocks in this field and observed their increasingly impressive performance in the capital markets. With blockchain driving further innovation, these companies are expected to seize even greater development opportunities in the future.

In recent years, especially with the introduction of cryptocurrency-related ETFs in the United States (such as the Bitcoin spot ETF), the regulatory benefits have marked a shift, indicating that cryptocurrencies are no longer confined to a closed digital currency market but are deeply integrated with traditional capital markets. Grayscale, as a pioneer in this area, has made its Bitcoin Trust (GBTC) a bridge for traditional investors to enter the crypto market. According to data, as of November 20, BlackRock’s Bitcoin spot ETF (IBIT) had an asset management size close to $45 billion, with nearly continuous net inflows since the beginning of the year. Meanwhile, Grayscale’s Bitcoin spot ETF (GBTC) manages around $20.3 billion in assets, demonstrating investor interest and confidence in this emerging asset class.

The total market value of the cryptocurrency market is currently about $3.2 trillion. We can categorize it into the following three main segments based on asset class:

1. Bitcoin (BTC)

Bitcoin, as the core asset of the entire crypto market, currently has a market capitalization of around $1.9 trillion, accounting for more than 50% of the total cryptocurrency market cap. It is not only recognized as a store of value by both traditional finance and the native crypto world but also, due to its anti-inflation characteristics and limited supply, has become the preferred choice for institutional investors, earning the title of “digital gold.” Bitcoin plays a crucial role in the crypto market, stabilizing the market while also providing a connected bridge between traditional assets and native on-chain assets.

2. Native On-Chain Assets

This category includes public chain tokens (such as Ethereum ETH), decentralized finance (DeFi) related tokens, and functional tokens in on-chain applications. This area is diverse, highly volatile, and driven by technological updates and user demand. Its current market value is about $1.4 trillion, which is significantly below the market’s expected high growth.

3. Integration of Traditional Assets and Crypto Technology

This area covers emerging projects such as tokenization of real-world assets (RWA) on-chain and blockchain-based securitized assets. Currently, its market value is only in the hundreds of billions, but with the widespread adoption of blockchain technology and its deep integration with traditional finance, this field is rapidly developing. Tokenizing traditional assets to enhance liquidity is also one of the key drivers for the future growth of the crypto market. We are confident that this will push traditional finance towards a more efficient and transparent digital transformation, unleashing immense market potential.

Why are we so optimistic about the growth potential of traditional assets?

In the past six months, Bitcoin’s asset attributes have undergone a new evolution, and the dominant forces in the capital markets have completed the transition from old powers to new funding sources.

In 2024, the position of cryptocurrencies in traditional finance will be further consolidated. Financial giants, including BlackRock and Grayscale, have launched Bitcoin and Ethereum exchange-traded products, providing more convenient digital asset investment channels for both institutional and retail investors. This further validates the connection with traditional securities.

At the same time, the trend of tokenizing real-world assets (RWA) is accelerating, further enhancing the liquidity and reach of financial markets. For example, Germany’s state-owned development bank KfW issued two digital bonds in 2024, totaling €150 million. These bonds were settled using distributed ledger technology (DLT). French computer equipment manufacturer Metavisio issued corporate bonds, using tokenization to provide capital for its new manufacturing facility in India. This also shows that traditional financial institutions are using blockchain technology to optimize operational efficiency, and many have integrated crypto technology into their business models.

Currently, a capital flow model centered around Bitcoin as a core asset, utilizing ETFs and the stock market as primary channels for fund inflow, and platforms like MSTR (MicroStrategy) in the U.S. stock market as carriers, is continuously absorbing U.S. dollar liquidity and expanding.

The integration of traditional finance and blockchain will create more investment opportunities than native on-chain assets. Behind this trend is a focus on stability and practical application scenarios. Traditional financial markets possess deep infrastructure and mature market mechanisms, and when combined with blockchain technology, they will release even greater potential. In this regard, Waterdrip Capital, particularly its Pacific Waterdrip Digital Asset Fund, will focus on the innovative integration of traditional finance and the crypto industry, seeking investment opportunities in the converging space.

This report will analyze the growth models of blockchain concept stocks, especially how they combine with on-chain assets, to uncover more innovative investment opportunities. For example, MSTR’s issuance model demonstrates a typical path of exchanging on-chain assets for U.S. dollar assets through convertible bonds and stock issuance. Recently, MSTR’s stock price has surged alongside Bitcoin, and the yield on its 2027-maturing convertible bonds reached a three-year high. This strategy has led its stock performance to far outperform traditional tech stocks.

From these perspectives, it becomes clear that the future development of the crypto market is not just about the incremental growth of digital currencies themselves, but also about the vast potential in their integration with traditional finance. From regulatory benefits to market structure changes, blockchain concept stocks are at a key juncture in this trend and have become the focal point of global investors.

We broadly classify current blockchain concept stocks into the following categories:

1. Asset-Driven Concepts:

Regarding blockchain stocks based on asset allocation concepts, the company strategy is to treat Bitcoin as the primary reserve asset. This strategy was first implemented by MicroStrategy in 2020 and quickly attracted market attention. This year, other companies, such as the Japanese investment firm MetaPlanet and the Hong Kong-listed company Boyaa Interactive, have also joined, with their Bitcoin acquisitions steadily increasing. MetaPlanet announced the introduction of the key performance indicator “Bitcoin Yield” (BTC Yield) developed by MicroStrategy. Its third-quarter BTC Yield was 41.7%, and by the fourth quarter (as of October 25), it had surged to 116.4%.

Top 30 Listed Companies Worldwide with Bitcoin as Corporate Reserve Asset
*Data source: coingecko

Specifically, companies like MicroStrategy have adopted the strategy of introducing the “Bitcoin Yield” key performance indicator to provide investors with a new perspective on evaluating company value and investment decisions. This indicator is based on the diluted number of outstanding shares and calculates the amount of Bitcoin held per share, excluding Bitcoin price fluctuations. The goal is to help investors better understand the company’s actions of purchasing Bitcoin through the issuance of additional common stock or convertible instruments, focusing on the balance between Bitcoin holdings growth and equity dilution. As of now, MicroStrategy’s Bitcoin investment yield has reached 41.8%, indicating that the company has successfully increased its holdings while avoiding excessive dilution of shareholder interests.

However, despite MicroStrategy’s significant achievements in Bitcoin investment, the company’s debt structure continues to attract market attention. Reports indicate that MicroStrategy’s current outstanding debt totals $4.25 billion. During this period, the company has raised funds through multiple rounds of issuing convertible bonds, some of which carry interest payments. Market analysts are concerned that if Bitcoin’s price were to fall sharply, MicroStrategy might need to sell some of its Bitcoin holdings to repay its debts. However, others argue that due to MicroStrategy’s stable traditional software business and the low interest rate environment, the company’s operating cash flow is sufficient to cover debt interest. Therefore, even in the event of a Bitcoin price crash, it is unlikely to force the company to sell its Bitcoin assets. Moreover, MicroStrategy’s stock market capitalization currently stands at $43 billion, and the debt proportion in its capital structure is relatively small, further reducing the risk of liquidation.

While many investors are optimistic about the company’s firm Bitcoin investment strategy, believing it will bring substantial returns to shareholders, some investors are concerned about its high leverage and potential market risks. Due to the extreme volatility of the cryptocurrency market, any adverse market changes could have a significant impact on the asset value of such companies. Additionally, their stock prices are trading at a significant premium to their net asset value, and whether this condition can persist remains a key market focus. If stock prices experience a correction, it could affect the company’s ability to raise funds, thus impacting its future Bitcoin purchasing plans.

1. MicroStrategy (MSTR)

Business Intelligence Software Company

Founded in 1989, MicroStrategy initially focused on business intelligence and enterprise solutions. However, since 2020, the company has transformed into the world’s first publicly listed company to adopt Bitcoin (BTC) as a reserve asset, significantly altering its business model and market position. Founder Michael Saylor played a key role in driving this shift, going from an early Bitcoin skeptic to a strong supporter of cryptocurrency.

Since 2020, MicroStrategy has continuously purchased Bitcoin through its own funds and debt financing. As of now, the company holds approximately 279,420 Bitcoin, valued at nearly $23 billion, representing about 1% of Bitcoin’s total supply. The latest purchase occurred between October 31 and November 10, 2023, where it acquired 27,200 Bitcoin at an average price of $74,463. The average holding price of these Bitcoin is $39,266, and with the current price of Bitcoin around $90,000, MicroStrategy’s unrealized gain is approximately 2.5 times.

Although MicroStrategy faced an unrealized loss of about $1 billion during the 2022 bear market, the company never sold any Bitcoin, opting instead to increase its holdings. The strong rise of Bitcoin in 2023 has significantly boosted MicroStrategy’s stock price, with an investment return of 26.4% year-to-date and a cumulative return of over 100%.

MicroStrategy’s business model can be seen as a “BTC-based leveraged cycle model,” where it funds Bitcoin purchases through bond issuances. While this model offers high returns, it also carries certain risks, especially with Bitcoin’s price volatility. According to analysis, Bitcoin’s price would need to fall below $15,000 for the company to face liquidation risks. Given Bitcoin’s current price of nearly $90,000, this risk is minimal. Additionally, the company has low leverage and strong demand in the bond market, further enhancing its financial stability.

For investors, MicroStrategy can be considered a leveraged investment tool for the Bitcoin market. With expectations of Bitcoin’s steady price increase, the company’s stock has significant potential. However, investors should be cautious of long-term risks associated with debt expansion. Over the next 1-2 years, MicroStrategy’s investment value will remain noteworthy, especially for those bullish on Bitcoin’s market prospects, though it is a high-risk, high-reward investment.

2. Semler Scientific (SMLR)

Semler Scientific is a medical technology company, and one of its innovative strategies is using Bitcoin as a primary reserve asset. In November 2024, the company disclosed it had purchased 47 Bitcoin, bringing its total holdings to 1,058 Bitcoin, with a total investment of around $71 million. Some of the funds for these acquisitions came from operating cash flow, signaling Semler’s intention to strengthen its asset structure through Bitcoin holdings, positioning itself as a representative of asset management innovation.

However, Semler’s core business remains focused on its QuantaFlo device, which is primarily used for diagnosing cardiovascular diseases. Still, Semler’s Bitcoin strategy is not merely a financial reserve. In Q3 2024, the company realized an unrealized gain of $1.1 million from its Bitcoin holdings, which provided financial hedging amid a 17% year-over-year decline in revenue.

Although Semler’s current market cap is only $345 million, much smaller than MicroStrategy’s, its strategy of adopting Bitcoin as a reserve asset has led investors to view it as a “mini version of MicroStrategy.”

3. Boya Interactive

Boyaa Interactive is a Hong Kong-listed company primarily engaged in gaming, ranked among China’s top developers and operators of online board games. In the second half of last year, the company began exploring the cryptocurrency market with the goal of fully transforming into a Web3 company. It has purchased significant amounts of Bitcoin and Ethereum, invested in multiple Web3 projects, and entered into a subscription agreement with Waterdrip Capital’s Pacific Waterdrip Digital Asset Fund SPC to cooperate in the Web3 gaming and Bitcoin ecosystem sectors. The company stated, “The purchase and holding of cryptocurrencies are important initiatives for the Group’s Web3 business development and layout, and an integral part of its asset allocation strategy.” As of the latest announcement, Boyaa Interactive holds 2,641 Bitcoin and 15,445 Ethereum, with total costs of approximately $143 million and $42.58 million, respectively.

Notably, with the recent surge in the cryptocurrency market, both Bitcoin and other cryptocurrencies have seen significant price increases. Based on cryptocurrency closing prices on the 12th, Boyaa Interactive has an unrealized gain of nearly $90.22 million on Bitcoin and $7.95 million on Ethereum, totaling almost $100 million in unrealized gains.

The continued rise in cryptocurrency prices has sparked heightened interest in related concept stocks. For example, in the Hong Kong stock market, companies like Bluebird Interactive (up 41.18%), Newfire Technology Holdings (up 27.40%), and OKCLOUDCHAIN (up 11.65%) have shown strong performances, indicating robust growth among blockchain-related companies. The Hong Kong blockchain market is still in its early stages, but the policy environment is improving, and recent policies supporting blockchain development are fostering innovation and creating growth opportunities for companies. Some companies rely on the asset-driven effects of cryptocurrency price fluctuations while actively exploring blockchain technology’s applications in gaming, finance, and the metaverse. The market’s future growth will depend on the effectiveness of technology implementation and ecosystem development, providing investors with clearer direction and confidence.

Boyaa Interactive’s cryptocurrency holdings are currently worth around HKD 2.2 billion, which exceeds its current market value. In Q2 2024, the company reported revenue of approximately RMB 104.8 million, a 5.8% year-over-year increase, with digital asset appreciation contributing RMB 6.74 million. The company attributes the revenue growth to the appreciation of the cryptocurrencies it holds.

Additionally, the company plans to increase its cryptocurrency holdings by up to $100 million over the next 12 months. Boyaa Interactive has also formed a team focused on Web3 gaming development and related infrastructure research. Benefiting from the significant increase in cryptocurrency assets, its Q1 profits grew by 1130% year-over-year, pushing its stock price up nearly 3.6 times since the beginning of the year. This makes it a typical asset-driven blockchain concept stock. Boyaa’s performance depends on cryptocurrency market fluctuations, and its stock price may continue to be driven by the growth of asset values.

2. Mining Concept

Blockchain mining concept stocks have attracted significant attention in recent years, especially with the price fluctuations of cryptocurrencies like Bitcoin. Mining companies benefit not only from the direct earnings of digital currencies but also, to some extent, from their involvement in high-growth industries such as artificial intelligence (AI) and high-performance computing (HPC). As AI technology rapidly develops, the demand for AI computing power is soaring, providing new support for the valuations of mining concept stocks. With power contracts, data centers, and their associated facilities becoming increasingly scarce, mining companies can generate additional revenue by providing computational infrastructure for AI needs.

However, not all mining companies are likely to fully meet the requirements of AI data centers. Mining operations often prioritize cheap electricity supplies, typically selecting locations with lower-priced but unstable short-term power, maximizing profit. In contrast, AI data centers place more emphasis on the stability of power supply, with a lower sensitivity to electricity price fluctuations, and tend to prefer long-term, stable electricity. Therefore, not all mining companies’ existing power facilities and data centers are suited for direct conversion into AI data centers.

Mining concept stocks can be divided into the following categories:

1. Mining companies with mature AI/HPC business: These companies not only focus on mining but also have well-established AI or HPC businesses, receiving support from tech giants like NVIDIA. Companies such as Wulf, APLD, and CIFR not only engage in cryptocurrency mining but also build AI computing power platforms and participate in AI inference. This integration of mining and AI computing demand has garnered significant market attention. \

1. Companies focused on mining and large-scale cryptocurrency accumulation: These companies primarily concentrate on mining and hold large amounts of Bitcoin and other digital currencies. CleanSpark (CLSK) is one representative of this type, with its Bitcoin holdings accounting for 17.5% of its market capitalization. Riot Platforms (RIOT) is another similar company, with Bitcoin holdings representing 21% of its market value. These companies aim to profit from the future rise in cryptocurrency market prices by accumulating Bitcoin and other digital currencies.

1. Diversified companies with a composite business model: These companies not only engage in cryptocurrency mining and accumulation but also venture into AI inference and the construction of AI data centers. Marathon Digital (MARA) is a representative of this category, with its Bitcoin holdings making up 33% of its market capitalization. These companies often reduce the risks of being solely dependent on one area by diversifying their business activities, thus improving overall profitability.

As the demand for AI increases, AI computing power and high-performance computing business will increasingly be combined with blockchain mining business, which may further increase the valuation of mining companies. In the future, mining companies will not only be “miners” of digital currencies, but may also become important infrastructure providers behind the development of AI technology. Although this road is full of challenges, in order to meet this trend, many mining companies have accelerated the deployment of AI computing power and data center construction, and are committed to occupying a place in this emerging field.

1. MARA Holdings (MARA)

One of the largest enterprise Bitcoin mining companies in North America, founded in 2010 and listed in 2011. The company focuses on cryptocurrency mining, specifically the blockchain ecosystem and the generation of digital assets. Marathon provides managed mining solutions based on its proprietary infrastructure and intelligent mining software, primarily mining Bitcoin. Similar to Riot, Marathon experienced a 12.6% drop in stock price, followed by further declines. However, Marathon’s stock price has risen rapidly over the past year.

According to the latest data from October, MARA (Marathon Digital) has reached a computing power of 32.43 EH/s, becoming the first listed mining company to achieve this scale. After the activation of its new 152 MW power capacity, the hash rate is expected to increase by about 10 EH/s. MARA recently acquired two data centers in Ohio and is building a third new site, adding 152 MW of mining power, with plans to fully operate by the end of 2025. MARA’s CFO, Salman Khan, stated that the cost of this asset acquisition is approximately $270,000 per MW and expects these deployments to help the company reach its goal of 50 EH/s by 2024.

Additionally, on November 18, MARA announced the issuance of $700 million in convertible senior notes, due in 2030. The funds will primarily be used to purchase Bitcoin, repurchase notes maturing in 2026, and support the expansion of existing operations. MARA plans to use the net proceeds to repurchase part of the convertible notes due in 2026, with the remainder allocated for purchasing more Bitcoin and general corporate uses, including working capital, strategic acquisitions, asset expansions, and debt repayments. This move further demonstrates MARA’s long-term bullish outlook on Bitcoin.

2. Core Scientific (CORZ)

Blockchain infrastructure and cryptocurrency mining services.

Core Scientific Inc., established in 2017, operates in two main sectors: equipment sales and hosting services, and self-built Bitcoin mining operations. The company generates revenue through consumer-based contracts and providing hosting services, while its digital asset mining division earns from operating computing equipment that processes blockchain network transactions and participates in user pools, with rewards in digital currency assets.

Recently, Microsoft (MSFT.US) announced it will spend nearly $10 billion between 2023 and 2030 to rent servers from AI startup CoreWeave, which has signed a new 120 MW high-performance computing hosting agreement with Bitcoin mining giant Core Scientific. After several expansions, CoreWeave now hosts a total of 502 MW of GPU capacity in Core Scientific’s data centers. Since signing the multi-billion-dollar contract with CoreWeave, Core Scientific’s stock price has surged, with a cumulative increase of nearly 300%. The company also plans to convert some data centers to host more than 200 MW of GPUs for CoreWeave.

This 12-year hosting contract is expected to bring $8.7 billion in total revenue to Core Scientific. While its Bitcoin mining hash rate remains stable, its market share has declined from 3.27% in January to 2.54% in September.

Overall, Core Scientific has successfully integrated the two booming sectors of AI and Bitcoin, especially in the AI data center domain, where it has secured significant contracts and is actively expanding its customer base, showing strong growth potential. Although its market share in Bitcoin mining has declined, its progress in AI data centers provides strong support for long-term stable growth, and further price increases are expected.

3. Riot Platforms (RIOT)

Headquartered in Colorado, USA, Riot Platforms focuses on blockchain technology development, support, and cryptocurrency mining. Previously, the company invested in several blockchain startups, including the Canadian Bitcoin exchange Coinsquare, but has now shifted its focus entirely to cryptocurrency mining.

Riot’s stock price has experienced significant volatility, particularly when Bitcoin prices dropped, with the stock falling by 15.8%. However, despite this, the company’s stock price has risen more than 130% over the past year.

Despite a recent market boost pushing its stock price up by 66% in just one week, Riot’s operating performance is not ideal. According to its third-quarter 2024 financial report, the company reported total revenue of $84.8 million, with $67.5 million from Bitcoin mining revenue. However, it posted a net loss of $154.4 million, with a loss of $0.54 per share, far exceeding the market’s expected loss of $0.18 per share. Additionally, the second-quarter loss was $84.4 million, compared to a net loss of only $27.4 million in the same period last year. Overall, Riot’s losses are continuing to widen, and while its stock price has risen in the short term, it remains uncertain whether it will sustain long-term growth.

4. CleanSpark (CLSK)

Green energy cryptocurrency mining.

CleanSpark focuses on Bitcoin mining using renewable energy. The company’s revenue grew to $104.1 million in Q2 2024, up from $45.5 million in the same period last year, representing a 129% increase. However, for the three months ending June 30, 2024, the company posted a net loss of $236.2 million, or $1.03 per share, compared to a loss of $14.1 million or $0.12 per share in the same period last year. Notably, despite a market rally in early November, CleanSpark (CLSK) did not benefit from it due to a suspension of trading. The company’s founder explained that the suspension was due to an error in calculating the subscription ratio during an acquisition process. The company also announced the completion of the acquisition of GRIID, aiming to increase its total mining power to 400 MW over the next few years. CleanSpark also holds a significant amount of Bitcoin, with its holdings accounting for 17.5% of its market capitalization.

In terms of stock performance, CleanSpark is one of the representative Bitcoin miners with a focus on renewable energy. With its green mining strategy and relatively low energy costs, the company has long-term development potential. The acquisition of GRIID and the expansion of mining power indicate a positive strategic layout for increasing market share and competitiveness. However, despite significant revenue growth, the company’s large losses will make investors’ focus on profitability and cash flow crucial for its future stock performance. Given the volatility of Bitcoin prices and energy costs, CleanSpark’s stock price may experience large fluctuations.

5. TeraWulf (WULF)

Cryptocurrency mining using green energy.

As operational risks decrease and profit margins rise, energy companies are gradually becoming a key force in the cryptocurrency industry. TeraWulf, a cryptocurrency subsidiary of Beowulf Mining Plc, recently disclosed in regulatory filings that the company expects its mining capacity to reach 800 MW by 2025, accounting for 10% of Bitcoin’s current computing power. TeraWulf focuses on providing sustainable cryptocurrency mining solutions, particularly leveraging renewable energy sources such as hydro and solar power, while also developing AI data centers.

Recently, TeraWulf announced an increase in the total size of its 2.75% convertible bonds to $425 million, with plans to use $118 million for stock repurchases. The financing also includes an over-allotment option, allowing initial purchasers to add $75 million within 13 days of the offering. The newly issued bonds will mature in 2030, with some funds allocated for stock repurchases, and the rest for general corporate expenses.

TeraWulf stated that stock repurchases will be prioritized and the company will continue its organic growth in high-performance computing and AI, along with potential strategic acquisitions. After the announcement, TeraWulf’s stock price surged nearly 30% since last Friday, outperforming Bitcoin and other mining companies.

Overall, TeraWulf’s strategic focus on clean energy and AI mining demonstrates strong growth potential. In the short term, the company may benefit from the market’s heightened interest in green energy and AI mining. However, given the volatility of the mining industry and the broader market environment, its long-term performance will require ongoing monitoring and evaluation. The recent rise in stock price may include some speculative elements but could also drive further growth through its sustainable development strategy.

6. Cipher Mining (CIFR)

Bitcoin Mining Company

Cipher Mining focuses on developing and operating Bitcoin mining data centers in the U.S. to enhance Bitcoin network infrastructure. Recently, Cipher Mining announced an expansion of its credit partnership with Coinbase, establishing a $35 million term loan. As of November 1, the company increased its existing $10 million credit line to $15 million and added a $35 million term loan.

Additionally, as the demand for artificial intelligence (AI) technology grows in the crypto market, Cipher Mining’s AI business valuation has risen. However, compared to peers like CORZ, APLD, and WULF, Cipher Mining’s stock price has seen relatively slower growth. While the company has made progress with its Bitcoin mining infrastructure, its slower development in AI technology may impact its short-term stock performance.

7. Iris Energy (IREN)

Renewable Energy Bitcoin Mining

Iris Energy focuses on Bitcoin mining globally using green energy, especially hydroelectric power. The company centers its operations around clean energy-driven Bitcoin mining, with environmental sustainability as its core competitive edge, distinguishing it from other mining companies. Compared to traditional coal and oil energy, IREN uses clean energy to reduce carbon emissions and lower operating costs. It currently operates several clean energy-powered mining facilities, especially in regions rich in renewable energy, such as Canada and the U.S.

Additionally, IREN is exploring cloud mining, but this part of its business is not as clearly defined as its clean energy mining operations. While cloud mining can reduce the demand for mining hardware and offer investors more flexible profit opportunities, its revenue model and market acceptance are still in the early stages. Compared to traditional Bitcoin mining, cloud mining has not yet demonstrated significant profitability. Therefore, IREN’s exploration into cloud mining can be viewed more as a trial project, far from mature, and its valuation should not be overestimated.

In terms of monetizing energy assets, IREN’s progress and potential currently lag behind some competitors, such as CIFR (Cipher Mining) and WULF (Stronghold Digital Mining). These companies have made significant strides in effectively integrating traditional energy assets and applying clean energy, giving them stronger market competitiveness. Although IREN has unique advantages in green energy mining, its monetization process is still behind that of CIFR and WULF, making it difficult to generate sufficient cash flow in the short term.

8. Hut 8 (HUT)

Bitfarms, headquartered in Canada, focuses on the development and operation of Bitcoin mining farms and continues to expand its mining scale. The company recently announced plans for an additional investment of $33.2 million to upgrade 18,853 Antminer T21 Bitcoin mining machines, originally planned for purchase from Bitmain, to the S21 Pro model. According to its Q3 financial report, Bitfarms has modified its procurement agreement with Bitmain, with the upgraded miners expected to be delivered between December 2024 and January 2025.

According to analysis by TheMinerMag, thanks to adopting the latest generation of mining equipment, Bitfarms has significantly reduced its miner costs—from $40.6 per PH/s in Q1 to $35.5 in Q2, with the most recent quarter further lowering this cost to $29.3.

Overall, Bitfarms has improved its mining efficiency and reduced costs by upgrading equipment and optimizing its procurement strategy, showing strong growth potential. This strategy not only enhances the company’s profitability but also strengthens its position in the competitive cryptocurrency market. As miner costs continue to decrease, Bitfarms is likely to maintain its advantage in Bitcoin mining, especially with a potential rebound in Bitcoin prices or growth in market demand.

9. Bitfarms(BITF)

Bitfarms, headquartered in Canada, focuses on the development and operation of Bitcoin mining farms and continues to expand its mining scale. The company recently announced a plan to invest an additional $33.2 million to upgrade the 18,853 Antminer T21 Bitcoin miners originally planned for procurement from Bitmain to the S21 Pro model. According to the third-quarter financial report, Bitfarms has modified its procurement agreement with Bitmain, and the upgraded miners are expected to be delivered between December 2024 and January 2025. According to analysis by TheMinerMag, thanks to the adoption of the latest generation of miners, Bitfarms has significantly reduced its mining costs: from $40.6 per PH/s in the first quarter to $35.5 in the second quarter, and further down to $29.3 in the latest quarter.

Overall, Bitfarms has demonstrated strong growth potential by updating its mining equipment and optimizing its procurement strategy, which not only reduces costs but also enhances mining efficiency. This strategy not only boosts the company’s profitability but also strengthens its position in the highly competitive cryptocurrency market. With further reductions in mining costs, Bitfarms is expected to continue gaining an advantage in Bitcoin mining, especially as Bitcoin prices rebound or market demand grows.

10、HIVE Digital Technologies (HIVE)

Cryptocurrency mining company and HPC business, Hive Digital, recently announced the acquisition of 6,500 Canaan Avalon A1566 Bitcoin miners and plans to increase its total hash rate to 1.2 EH/s, demonstrating the company’s continued investment in the cryptocurrency mining field. However, since the end of last year, Hive Digital has made it clear that it will shift more resources and focus toward high-performance computing (HPC). The company believes that HPC offers higher profit margins compared to Bitcoin mining, and it has certain technological barriers that can provide more sustainable revenue growth. To this end, Hive is transforming 38,000 Nvidia data center GPUs originally used for Ethereum and other cryptocurrency mining into on-demand GPU cloud services, marking a new chapter in its AI and HPC endeavors.

This strategic transformation aligns with industry trends. Similar to other mining companies like Hut 8, Hive quickly turned its attention to HPC and AI business after Ethereum’s shift from Proof of Work (PoW) to Proof of Stake (PoS). Today, Hive’s HPC and AI business generates 15 times more revenue than Bitcoin mining, with demand for GPU computing rapidly growing. According to a Goldman Sachs report, the GPU cloud service market has broad prospects. Fortune Business Insights predicts that by 2030, the GPU services market in North America will grow at a compound annual growth rate (CAGR) of 34%. Especially with the increasing demand for AI projects, such as large language model technologies behind ChatGPT, nearly every enterprise requires substantial GPU computing power to support the operation and development of these technologies.

From an investment perspective, Hive Digital’s transformation strategy lays a solid foundation for its future growth. Although the company still has a presence in the cryptocurrency mining field, with the rapid development of its HPC and AI business, Hive is gradually reducing its over-reliance on traditional Bitcoin mining and opening up more diversified and high-profit revenue channels.

3. Infrastructure and Solution Providers

Mining hardware/blockchain infrastructure concept stocks refer to companies focused on Bitcoin mining hardware, blockchain infrastructure construction, and related technical services. These companies mainly profit by designing, manufacturing, and selling specialized mining equipment (such as ASIC miners), providing cloud mining services, and operating the hardware infrastructure necessary for blockchain networks. Mining hardware manufacturers are the core of blockchain infrastructure as they provide the hardware needed for mining cryptocurrencies like Bitcoin. ASIC (Application-Specific Integrated Circuit) miners are the most common type, specifically designed for cryptocurrency mining. The revenue of mining hardware manufacturers primarily comes from two sources: sales of mining machines and mining machine hosting and cloud mining services.

Typically, the price of mining machines is influenced by multiple factors, including Bitcoin market fluctuations, the cost of mining machine production, and supply chain stability. For example, when Bitcoin prices rise, miners’ earnings increase, which usually leads to a higher demand for mining machines, thereby driving revenue growth for mining hardware manufacturers. In addition to mining machine production, blockchain infrastructure also includes mining pools, data centers, and other cloud service platforms that provide computational power support.

For investors, mining hardware manufacturers and blockchain infrastructure companies may offer high growth opportunities, especially when the cryptocurrency market is in an upward cycle. The demand for mining machines is positively correlated with Bitcoin prices. However, these companies also face high volatility risks, influenced by market sentiment, technological innovation, and regulatory policies. Therefore, when investing in such concept stocks, investors need to consider not only an optimistic outlook on the cryptocurrency market but also the potential risks brought by market uncertainty.

1. Canaan Inc. (CAN)

Research and Development of Blockchain Hardware Products

Canaan was founded in 2013 and released the world’s first ASIC chip-based blockchain computing device the same year, leading the industry into the ASIC era and gradually accumulating rich experience in chip mass production. In 2016, the mass production of 16nm products marked Canaan as the first company in Mainland China to enter the advanced process camp. Since 2018, Canaan has successively achieved the mass production of the world’s first self-developed 7nm chips and the mass production of RISC-V self-developed commercial edge intelligent computing chips, the K210.

Since its inception, Canaan, with its leading ASIC mining technology and self-developed chips, has become an important player in the blockchain hardware field. Compared to other mining hardware manufacturers, Canaan’s ability to self-manufacture mining machines has more potential benefits for increasing mining profitability. Despite the bear market in the past year, Canaan’s mining machine sales have remained at a high level, particularly with the rebound in Bitcoin prices, and future sales are expected to grow significantly.

The biggest potential upside comes from the price change of mining machines. If mining machine prices increase—due to unexpectedly high demand or limited supply—the rise in prices could drive up mining company valuations, creating a “Davis Double” effect and boosting the overall company valuation. Recently, Canaan secured two significant institutional orders, with Hive purchasing 6,500 Avalon A1566 miners, which will further drive its sales and revenue growth, demonstrating market recognition and demand for its mining machines.

From Canaan’s fundamentals and market expectations, the current stock price does not fully reflect its future potential. Assuming the Bitcoin market recovers and mining machine prices remain stable or increase, Canaan’s sales revenue and profits will experience substantial growth, further driving its valuation upward.

1. Bitdeer(BTDR)

Cloud Mining Services and Mining Hardware Manufacturing

Bitdeer provides global cryptocurrency mining computing power, allowing users to lease computational resources for Bitcoin mining. The company offers hash rate sharing solutions, including cloud hash power and hash rate marketplaces, as well as one-stop mining machine hosting services, covering deployment, maintenance, and management to support efficient cryptocurrency mining.

Recently, Bitdeer launched its next-generation water-cooled mining machine, the SEALMINER A2, as the second generation of the SEALMINER series. The SEALMINER A2 is equipped with Bitdeer’s self-developed second-generation SEAL02 chip, which has significantly improved energy efficiency, technical performance, and stability compared to the A1 series. The A2 series includes both air-cooled SEALMINER A2 and water-cooled SEALMINER A2 Hydro models, designed to meet mining demands in different environments. Both models use advanced heat dissipation technology, optimizing power consumption control and hash rate performance to ensure stable operation under high loads. According to test data, the A2’s energy efficiency is 16.5 J/TH, with a hash rate of 226 TH/s, slightly lower than the 13.5 J/TH of mainstream mining machines such as those from Bitmain and MicroBT. The company also announced that the A2 has entered mass production and is expected to increase hash rate capacity by 3.4 EH/s in early 2025. Bitdeer plans to complete the tape-out design of the SEAL03 chip in the fourth quarter, with an energy efficiency target of 10 J/TH.

Overall, Bitdeer is at a critical stage of innovation and growth, particularly in the fields of water-cooled mining machines and hash rate sharing. Notably, as a cloud mining platform, it offers hash rate leasing and hosting services, not just traditional mining machine sales. Unlike traditional mining hardware manufacturers, cloud mining and hosting companies are more flexible in capital and resource allocation, enabling them to expand market share by offering on-demand computing resources to meet different investment needs. Therefore, while the overall cryptocurrency market trends influence Bitdeer’s performance, its diversified and innovative business model may help it maintain relative stability amid market fluctuations.

3. BitFuFu(FUFU)

Cloud Mining Services and Digital Asset Management

BitFuFu, a Bitcoin mining and cloud mining company supported by Bitmain, is dedicated to providing global users with cloud mining services, allowing them to participate in Bitcoin mining without purchasing hardware. According to the latest third-quarter financial report, BitFuFu holds approximately $104 million in digital assets, equivalent to 1,600 Bitcoins. Of these, 340 Bitcoins belong to the company, while the rest are owned by clients who utilize its cloud mining and hosting services. BitFuFu is not only a service provider in the Bitcoin mining space but also a significant Bitcoin asset manager.

In addition, BitFuFu has entered into a two-year credit agreement with Antpool, a subsidiary of Bitmain, with a maximum loan limit of $100 million. This credit agreement further strengthens BitFuFu’s partnership with Antpool and enhances its flexibility in capital operations. As Bitcoin prices fluctuate, more Bitcoin mining companies (such as MARA and CleanSpark) are also starting to use Bitcoin-backed loans and other financing methods, flexibly leveraging their Bitcoin assets to support business development and capital expansion.

From an investment perspective, BitFuFu benefits from the support of Bitmain and Antpool, giving it unique advantages in hardware supply and hash power resources. This enables BitFuFu to provide efficient and stable mining equipment and optimize its mining operations and pool support. As a result, BitFuFu possesses a clear technical and resource advantage in the cloud mining sector, attracting more users and capital to the platform.

Overall, as the Bitcoin market gradually recovers and cloud mining demand increases, BitFuFu stands to benefit from this trend. Compared to traditional mining companies, cloud mining allows investors to participate in Bitcoin mining at a lower cost, especially for users without hardware resources.

4. Exchange concept:

1、Coinbase (COIN)

Cryptocurrency Exchange Platform, Digital Asset Trading and Storage Services

Coinbase, founded in 2012 and listed on NASDAQ in 2021, is the first and only legally compliant public cryptocurrency exchange in the United States. This status makes it the largest cryptocurrency exchange in the U.S. by trading volume and has attracted many institutions to choose it as the preferred platform for custodial crypto asset services.

Coinbase co-issued the USDC stablecoin, pegged to the U.S. dollar, with Circle and has expanded into diverse services such as staking and custody. Additionally, Coinbase is a core holding for ARK Invest’s Cathie Wood, who has frequently expressed her positive outlook on the company.

Coinbase’s stock price has a strong correlation with Bitcoin, reaching its all-time high on November 8, 2021, almost simultaneously with Bitcoin’s all-time high on November 10, 2021. The recent low point, on November 21, 2022, saw its stock price bottoming out alongside Bitcoin. From its 2021 peak of $368.90 to its low of $40.61, Coinbase’s stock experienced a 89% drop, which was even steeper than Bitcoin’s 78% drop during the same period, highlighting Coinbase’s amplified volatility within the crypto market.

In the past six months, Coinbase’s stock fluctuations have mainly been influenced by regulatory pressures and the approval process of Bitcoin ETFs. While the initial approval of Bitcoin ETFs in 2023 was seen as a significant positive development, the market later expressed concerns about how these products might divert attention from Coinbase’s traditional business model, leading to a temporary drop in its stock price. Despite this, post-election market dynamics have brought Coinbase positive developments.

As Trump’s election victory enhanced expectations for cryptocurrency-friendly policies, market confidence surged, pushing Coinbase’s stock price rapidly upward, from a brief dip to $185 to approximately $329. It is expected that Coinbase will continue to benefit as Bitcoin investment demand from ordinary U.S. investors grows, given its status as a legally compliant exchange in the U.S. With a solid foundation and its highly compliant identity, Coinbase stands to gain from favorable policies. Moving forward, as more retail investors enter the market, Coinbase may attract substantial traffic.

2、Bakkt Holdings(BKKT)

Bakkt is a leading cryptocurrency platform focused on providing compliant crypto asset custody and trading services for institutional investors. The company holds a cryptocurrency asset custody license from the New York State Department of Financial Services (NYDFS) and has earned the trust of institutional clients, especially due to the security incidents faced by multiple crypto asset custody platforms in recent years.

Initially founded by the Intercontinental Exchange Group (ICE), Bakkt became an independent publicly traded company, demonstrating the integration of traditional finance and the crypto economy. Recently, Bakkt’s stock experienced a significant rise, mainly driven by the news that Trump’s media and technology group (DJT) plans to fully acquire Bakkt. According to the Financial Times, DJT is in deep discussions for the acquisition, which, if successful, would further expand Trump’s crypto market presence and provide Bakkt with funding and growth opportunities.

Upon the announcement, Bakkt’s stock surged by 162%, with an additional 15% rise in after-hours trading. DJT’s stock also climbed about 16.7%. Prior to the announcement, Bakkt’s market value stood slightly above $150 million, based on the company’s recent financial performance and the volatility in the crypto market. However, Bakkt’s revenue has not met expectations (for the three months ending September 30, its revenue was $328,000 with an operating loss of $27,000).

From an investment perspective, Bakkt has significant potential but also faces challenges. It possesses a unique advantage in compliance and institutional services, especially as more institutional investors enter the market. Bakkt’s recent stock surge is mainly driven by Trump’s acquisition intentions, which could accelerate its development in the cryptocurrency trading space. However, Bakkt’s past earnings performance has been underwhelming, and its primary revenue streams—crypto asset custody and trading services—still face uncertain growth potential. Therefore, when investing in Bakkt, it’s essential to consider the sustainability of its business model and the intense market competition it faces.

5. Payment concept:

Block (SQ)

Founded in 2009, Block, formerly known as Square, began accepting Bitcoin as a payment method in 2014. Since 2018, the company has been active in the Bitcoin space. Starting in 2020, Block began purchasing large amounts of Bitcoin for both its payment business and as a company asset reserve. In the third-quarter financial report for fiscal year 2024, Block’s total net revenue reached $5.976 billion, a solid 6% increase compared to $5.617 billion in the same period last year. Excluding Bitcoin-related revenue, total net revenue grew to $3.55 billion, up 11% year-on-year. Net profit swung from a net loss of $93.5 million in the same period last year to a profit of $281 million, a 402.1% increase.

The strong application support of the Square business, its solid asset reserves, and stable cash flow from its operations make it one of the more stable concept stocks. Additionally, the certainty of Bitcoin’s positive outlook following Trump’s election has led to a 24% increase in Square’s stock in the past two weeks.

As a payment concept stock, investors interested in Block might also want to follow PayPal. Known as a global payment giant, PayPal offers digital payment services to businesses and consumers worldwide. In recent years, they have shown strong interest in blockchain technology, with notable moves such as the launch of the PayPal USD (PYUSD) stablecoin in 2023. PYUSD is a USD-backed stablecoin based on Ethereum and is one of PayPal’s core strategies for integrating digital payments with blockchain. PayPal also made its first blockchain investment using PYUSD, supporting a company focused on digital asset transfer and embedded financial platforms, Mesh.

In contrast, Block’s focus in the blockchain space is more concentrated on Bitcoin, integrating it into payment services and the company’s asset reserve.

Summary:

The demand for blockchain concept stocks is growing rapidly and may even surpass the demand for traditional tech stocks and cryptocurrencies themselves. As blockchain technology expands from its initial cryptocurrency applications to broader industry solutions, the market demand for related technologies and infrastructure has significantly increased. Compared to traditional tech stocks, blockchain concept stocks have greater growth potential because they rely not only on continuous technological innovation but also on the digital transformation of global financial markets and the trend towards decentralization.

As blockchain technology matures and the regulatory environment improves, the market prospects for blockchain concept stocks will become clearer. Especially with the increasing clarity of cryptocurrency regulations across the globe, blockchain companies are expected to experience explosive growth on a compliant basis. We expect more traditional industries to adopt blockchain technology, further driving innovation and market demand in this sector. Waterdrip Capital will continue to be optimistic about the long-term development potential of the blockchain sector, closely monitor related companies and their technological progress, and actively invest in this field. In the coming years, blockchain concept stocks are expected to become one of the most attractive investment directions in the global capital markets.

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