No one can dispute Bitcoin (BTC) is a volatile investment but what about instead investing in companies tied to cryptocurrency technologies?
This is certainly a viable strategy and often lacks the extreme volatility seen in BTC.
Investment in funds and companies tied to cryptocurrencies and related technologies offer less volatile paths to participating in crypto tech. While there is still some risk, since a company can file for bankruptcy at any time, much of the volatility is removed.
Reading through financial statements and news on any company you might want to investment in is another way to reduce your risk.
In this article, we look at seven different funds and companies involved in cryptocurrency technologies that you can invest in today.
Bitcoin Investment Trust (GBTC)
GBTC is an investment fund that focuses on BTC. The fund began trading at $32/share in 2015. Back then, BTC bounced between $200 and $450. As of 1/12/2018, GBTC is trading at $1965.
As you can see, GBTC isn’t tracking the price of BTC one-for-one. In fact, each share currently represents 0.092 of BTC.
What exactly are you trading in when you buy shares of GBTC? As mentioned above, the fund does own BTC but is leveraged. It’s custodian, Xapo, keeps its BTC safe.
As with most derivative investments, there are management fees to consider. This fund is particularly high coming in at 2%. Also be aware of stock splits, which can depress the value of your investment.
GBTC announced that it would be doing a 99:1 stock split. The split will affect share holders of record for January 22. After the split, the price will come down to around $21.
Why split the price? With a near $2000 price tag, GBTC is out of reach for many investors.
To bring in more investors, funds and ETFs will often split their share price. Existing share holders are the ones who can lose out though as splits usually result in depression of value.
Riot Blockchain, Inc. (RIOT)
Riot Blockchain is a true crypto asset focused company.
They build and support blockchain technologies, specifically for BTC and Ethereum. RIOT was formally known as Bioptix, Inc but changed its name in October 2017, as the company focused on blockchain technology.
In November 2017, the company’s stock price began ascending from $7.02 to staying mostly above $20.
The company is not yet profitable and has reported stale quarterly revenue through out 2017.
Marathon Patent Group, Inc. (MARA)
While not a pure crypto asset play, MARA acquires patent assets of all kinds. In November of 2017, it announced it would be acquiring Global Bit Ventures Inc., A Digital Asset Technology Company.
Global Bit Ventures is actually a cryptocurrency mining company.
Note that the stock has split three times, with its most recent in October 2017. It is currently trading at $4.17.
DPW Holdings, Inc. (DPW)
DPW is a traditional manufacturer of power system solutions. They sale to a broad range of industries. The company recently announced that it would be creating a cryptocurrency mining division.
For those of you who aren’t familiar with cryptocurrency mining, the concept is similar to mining for gold. Meaning, high cost and time-consuming.
You might be wondering what’s the association between a power supply company and cryptocurrency mining? That’s a very good question.
There are lots of companies getting in on the crypto asset craze by simply putting out press releases that they are now somehow involved in crypto tech.
Be careful, lots of times this is just a scheme to boost the stock. The gains are usually temporary and the stock price falls back to Earth quickly.
In the case of DPW, they hired a cryptocurrency mining consultant company to help them with the effort. To answer the above question, it’s difficult to see the relation between cryptocurrency mining and power supplies.
The company hasn’t really clarified the link either. That doesn’t mean it isn’t a legitimate endeavor that can’t pay off. They are diversifying their strategy by mining ten different cryptocurrencies rather than just one.
All of these companies are involved in the cryptocurrency space through their microprocessor technologies. Some computers are designed specifically for cryptocurrency mining.
NVDA has taken the lead in this area. But AMD and INTC are still benefiting.
While it’s difficult to peel away just how much of these companies overall revenue comes from cryptocurrency related business, they are all low risk compared to the other companies and funds we’ve looked at.
Besides reduced risk, there are additional advantages to investing in these bigger names. Companies such as Facebook, Amazon, and Alphabet Inc. all heavily utilize the cloud.
AMD, INTC and NVDA are some of the bigger players powering the cloud. Cloud services will only continue to grow, benefiting companies who power those services.
There are many ways to invest in cryptocurrencies without having to buy coins, tokens or participate in ICOs.
We’ve seen there are funds and companies with varying degrees of risk. Sometimes, more risk can mean bigger rewards.
If high risk/reward doesn’t appeal to you, there are well-known names involved in cryptocurrencies that may turn out to be great longer-term investments.
Have you invested in crypto currencies yet?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.