To the bold go the spoils
While 2021 represented a remarkable year for cryptocurrencies, 2022 is becoming the opposite. With two major headwinds in the form of severe geopolitical flashpoints and a Federal Reserve that likely must act strongly to combat soaring consumer inflation, risk-on assets like virtual currencies haven’t had much to smile about in the new year. The same could be said about blockchain stocks to buy.
On the other hand, a case certainly exists that crypto-related investments could be presenting buying opportunities. Like any high-flying asset class, a correction is a much-needed development because it will essentially eliminate toxicities from the market on the way to substantially higher prices. Combined with so much interest in the space, blockchain stocks will surely attract contrarian buyers.
But should you join in on the fun? Frankly, this is a situation where my personal feelings contrast with the editorial direction. For full disclosure, at the time of writing, I’m not making any big moves in the crypto market. Instead, my eyes are on the war between Russia and Ukraine, along with the moves the Fed will make. Logically, then, I’m not too eager to pile into blockchain stocks.
With that out of the way, a possibility exists that most of the consumer inflation stems from supply chain woes. Once cured — and you’d think that would be the case at some point — prices may normalize. If you’re a perpetual optimist, these blockchain stocks could work out for you.
- Advanced Micro Devices (NASDAQ:AMD)
- BlackRock (NYSE:BLK)
- IBM (NYSE:IBM)
- Taiwan Semiconductor (NYSE:TSM)
- PayPal (NASDAQ:PYPL)
- Marathon Digital Holdings (NASDAQ:MARA)
- Iris Energy (NASDAQ:IREN)
One last caveat before we move forward: your optimism alone will not guarantee upside movements in blockchain stocks. Yes, an obvious statement to be sure. However, after reading a lifetime’s worth of inane investing posts on social media, I don’t want to assume anything. Please conduct your own due diligence before considering these highly risky ideas.
Blockchain Stocks: Advanced Micro Devices (AMD)
One of the heavyweights of the graphics processing unit industry, Advanced Micro Devices is one of the safer — relatively speaking of course — blockchain stocks to buy. If the company’s exposure to the crypto-mining space doesn’t pan out, AMD is still incredibly relevant with its video-gaming infrastructure and other prominent businesses.
As with so many other investment categories, AMD has not had a great go of 2022, with shares down more than 27% on a year-to-date basis. Much of this has to do with the global supply chain crisis, which has severely impacted the semiconductor industry. If you’re in the optimistic camp, though, you might regard the red ink as a huge discount on an incredibly viable company.
AMD could ultimately be one of the most compelling blockchain stocks to buy. That’s because with other crypto-related investments, you’re placing wagers on which team will win a matchup. Here, you’re selling tickets to the game, which may be a more comfortable situation for the crypto hesitant.
Typically not a name you would consider for blockchain stocks, BlackRock, the world’s largest asset manager, may change this reputation. Not too long ago, insiders associated with the company made waves when they disclosed preparations for a cryptocurrency trading service to its investor clients.
Here’s what Coindesk.com reported: “The New York-based company, which manages over $10 trillion in assets for institutions, plans to enter the cryptocurrency space with ‘client support trading and then with their own credit facility,’ one of the people said. In other words, clients would be able to borrow from BlackRock by pledging crypto assets as collateral.”
On the plus side for crypto investors, the asset manager accepting digital assets is yet another sign of sector integration.
Blockchain Stocks: IBM (IBM)
When people talk about blockchain stocks, it’s almost inevitable that the discussion eventually steers toward crypto coins and tokens. Indeed, some folks new to the space will often use terms like crypto and blockchain interchangeably. While the two concepts are similar, the end points are often dramatically different.
For those investors who prefer the underlying utility of blockchain stocks as opposed to the speculative component, you might want to check out IBM. I know what you’re thinking: IBM hasn’t been relevant for years. However, the company — while admittedly printing some disappointing performances in its chart — has been hard at work pivoting away from its legacy businesses toward contemporary endeavors.
Of course, one of those endeavors is decentralized protocols, which offer myriad applications. For instance, IBM is exploring blockchain technology to import multi-tier visibility and workflow automation for supply chain processes. Such efforts will not only improve speed and efficiency, they can also impart said improvements accurately via unparalleled data integrity.
It’s also worth noting that while IBM is down, its YTD loss of nearly 11% is rather mild compared to other blockchain stocks.
Taiwan Semiconductor (TSM)
An indirect play among blockchain stocks, Taiwan Semiconductor nevertheless is a serious contender for decentralized applications. As Theblockcrypto.com pointed out, crypto-mining specialists depend on companies like TSM to manufacture application-specific integrated circuit (ASIC) chips for mining-specific hardware.
With so many cryptos and decentralized projects around, it’s conceivable that demand for ASIC chips will only rise.
Fortunately, the company announced last year that it plans to invest $100 billion over the next three years to grow its capacity. This initiative will translate to developing the manufacturing and research of advanced semiconductor technologies. Theoretically, the multi-billion-dollar investment should augur well for crypto miners and thus TSM stock.
Like IBM above, the YTD loss for TSM is relatively mild compared to other blockchain stocks at 15%. Shares have also been very stable for the last several months, which is an encouraging sign.
Not so encouraging, though, is China. A huge concern about Russia’s belligerence in Europe is that it could give China ideas about Taiwan, especially if the U.S. response is either weak or ineffective. Therefore, I’d take great caution with TSM.
Blockchain Stocks: PayPal (PYPL)
One of the top technology firms of the modern era, PayPal is also among the blockchain stocks to consider. A leader in the digital payment processing segment, PayPal also allows its users to buy, sell and hold digital assets. It’s not the most robust offering so if you’re looking to acquire obscure coins and tokens, you’re going to want to look elsewhere.
However, what makes PayPal incredibly intriguing is its centralization. Yes, I said it, centralization. While crypto proponents make the world out of decentralized protocols and applications, what happens if things go awry? Sadly, terrible things happen in the digital Wild West, which makes opening a PayPal account for crypto holdings worthwhile.
You see, if stuff goes sideways — like your account getting hacked — PayPal will replace your crypto in whole. As crypto crimes increase in magnitude and frequency, this level of centralized security is something many folks will likely consider.
Still, you want to be careful with PYPL stock. With shares down nearly 50% YTD, there could be more pain in the near term.
Marathon Digital Holdings (MARA)
With the last two blockchain stocks on this list, I’m going to dive into the speculative side of the arena. In short, don’t mess around with these ideas with money that you can’t afford to lose.
First up is Marathon Digital Holdings, an enterprise-level crypto miner in North America. Featuring economies of scale and low energy costs, Marathon could be an alternative to those who want to participate in the crypto narrative but are worried about the nefarious activities that occur in the decentralized market, such as hacks and lost passwords. At least with a publicly traded security, you have some peace of mind from an administrative perspective.
But that doesn’t do much to resolve the volatility component of mining-specific blockchain stocks, which is why I’m nervous about Marathon at this juncture. Should some of the major global headwinds pan out as pessimists anticipate, it could be dark days ahead for MARA stock.
However, I will concede that MARA has been resilient at the $20 level. So, it’s possible that shares could swing higher but again, please be careful.
Blockchain Stocks: Iris Energy (IREN)
An interesting idea among blockchain stocks if you prefer living dangerously but ethically, Iris Energy bills itself as a sustainable crypto miner. Through its development, ownership and operation of data centers and electrical infrastructure, Iris Energy is able to extract virtual currencies through renewable power sources.
As well, Iris features partnerships with First Nations and Indigenous communities, thus on paper allowing everyone involved in the supply chain to benefit from the crypto-mining venture. With so much attention now paid to responsible actualization of blockchain-based initiatives, Iris might be onto something big.
Still, in my coverage for Benzinga, I cited research that “the rapid development within the underlying blockchain arena — or the decentralized network architectures from which cryptos originate — quickly obsolesces highly specialized mining equipment. Unfortunately, this circumstance translates to burgeoning IT equipment waste, which also contain toxic materials. No renewable energy platform has a solution for this consequence.”
Since its first closing session, IREN has dropped nearly 45% in the market. Still, over the trailing month, it’s up 46%. If you have the stomach for risk, this is one you might want to consider.
This article originally appeared at InvestorPlace.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.