When it comes to investing in cryptocurrencies, there are a few options among Canadian stocks that investors can consider.
- First, they can buy the cryptos outright through qualified exchanges
- They can also choose an ETF that tracks the price of crypto itself At the moment, there are several Bitcoin and EthereumETFs for investors to choose from
- The last option is to invest in companies that operate in the space
This is a little bit tricky as there have been a plethora of cryptocurrency stocks that have listed in recent years. In this article, we're going to go over some of the best.
Before we jump into some of the top Canadian crypto stocks, it's important to understand that this industry is still in its infancy
That means investing in crypto stocks is likely to bring considerable volatility and these investments are only appropriate for those with a higher risk tolerance. Those just learning how to buy stocks will want to exercise caution.
The majority are also small to mid caps, with little operational history to speak of, so the merits of the companies on this list can change in a flash. These crypto stocks can also trade heavily on momentum, and swings in price on a daily or weekly basis can be substantial in either direction. The volatility will be one of the main drawbacks for conservative investors looking for exposure.
With that in mind, let’s look at some of the top crypto stocks in Canada today that you can consider adding to your portfolio or watchlist. Of note, we could have filled this list with one type of crypto stock, but we decided to highlight a variety from different sub-industries in the crypto space.
Hut 8 Mining Corp (TSE:HUT)
Similar to the gold industry which has gold producers, the crypto industry also has miners. Hut 8 (TSX:HUT) is the largest cryptocurrency miner in the industry with a market capitalization of approximately $2 billion. It is also one of the few in the industry to be listed on the TSX Index, one of Canada’s senior exchanges.
Hut 8 has one of the highest installed capacity rates in the industry and holds more self-mined bitcoin than any other crypto miner or publicly traded company globally.
Hut 8 is a Bitcoin pureplay and as of end of Q3 of Fiscal 2021 held $263.8 million worth of digital assets – which in this case, consists of 4,729 Bitcoin.
This is up considerably from the 2,761 Bitcoin it held as of end of December 2020. As the company has increased mining capacity and production, the company mined 1,997 Bitcoin in the first nine months of the year.
Much like gold miners and other companies with exposure to gold which move in tandem with the price of gold, so too will Hut 8 with the price of Bitcoin. The investment thesis here is simple, Hut 8 is a bet on Bitcoin.
By now I’m sure you’ve heard of the term Metaverse. Did you know the first publicly listed Metaverse company wasn’t actually Facebook, but was a little known gem on the NEO exchange called Tokens.com (NEO:COIN).
Tokens.com began as a staking pureplay, in which it bought and staked crypto and earned rewards accordingly.
However, it has evolved into a Metaverse play and began making waves in the space a few months ago.
It is the majority owner of Metaverse Group, an NFT based virtual real estate owner and developer. Through Metaverse Group, Tokens.com recently made the single largest purchase in Metaverse history when it picked up a 116-parcel estate in Decentraland’s coveted Fashion district. The transaction cost was 618,000 MANA which was valued at close to $3M at the time.
Circling back to staking, the company has Ethereum, Polkadot, Solana, Oasis, Terra, Shiba Inu and Ankr Tokens which are fully staked. As of end of Q3, it has approximately $1 billion in digital assets, which generated revenue of $675,000 through the first nine months of the year.
Those numbers are only going to increase quarter over quarter as the staking process was spread out over the first nine months of the year. The company also announced that it purchased additional altcoins Solana, Terrra and Ankr for staking in late November.
If you are looking for a play in the metaverse, there is none further along that Tokens.com.
Defi Technologies (NEO:DEFI)
Defi Techonlogies (NEO:DEFI) is quickly establishing itself as a leading decentralized finance company. Their mission is to bridge the gap between traditional capital markets and finance. It aims to identify opportunities to innovate, build and invest in new technologies and ventures in the DeFi space.
The company has been growing at a rapid pace through acquisition and its main subsidiary Valour Inc had US$374M in assets under management as of end of Q3 of Fiscal 2021. Valour is responsible for its suite of exchange traded products (ETPs) which trade on various exchanges globally.
As examples, it launched a Solana ETP on the Nordic Exchange and Valour ETPs on the Frankfurt exchange in mid-2021. Also worth noting, Valour hired a former BlackRock director as its COO. BlackRock is one of the world’s largest asset management companies and is one of the most respected issuers of funds with nearly $9.5 trillion in AUM (assets under management.)
The company has also begun running nodes for DeFi protocols. It entered into an initial contract with Paycase to provided a node for their Shyft network. DeFi Tech earns revenue as it gets a fee for each transaction on the network.
The company is also in the staking game and once the public purchases the ETP certificates, DeFi can in turn stake those in the network and earn interest. As the company puts it, “The beauty is: DeFi Technologies has no exposure risk to the underlying.”
Voyager Digital (TSX:VOYG)
There are a few crypto exchanges to chose from but today, we’re going to highlight Voyager Digital (TSX:VOYG). Founded in 2018, Voyager is one of the fastest growing crypto platforms in the U.S.
Crypto traders can buy and sell over 60 different crypto assets with its mobile application and investors can also earn rewards on more than 30 cryptocurrencies.
The company also provides crypto payment solutions to consumers and business through its Coinify subsidiary.
The company is delivering considerable growth and it expects to exceed $360M in revenue in the 2021 calendar year. As of end of Q1 of Fiscal 2022 (September 30), it had 2.15 million verified users, up 23% from 1.75 million as of end of June.
Total funded accounts grew to 860K from 665K previously and total assets under management jumped to $4.3B from $2.6B. At the time of the release of quarterly results (mid-November), that number grew to just under $7B.
The nice thing about exchanges is that volatility in the space is actually a good thing. The more transactions that occur, the more money voyager makes because of things like trading fees. It is not reliant on a high crypto price to make money.
Given the rapid adoption of crypto and NFTs, Voyageur is well positioned to continue growing its member base. It is estimated that only 26% of US residents own crypto, a number that is expected to rise exponentially in the coming years.
There will be room for multiple exchanges to be successful and thus far, Voyager’s growth numbers demonstrate that management knows what it takes to deliver.
Ether Capital Corp (NEO:ETHC)
This is the third company on our list to be listed on the NEO Exchange. The NEO is quickly becoming a hotbed to innovative companies and products, so its no surprise that many of the crypto and blockchain technology companies are choosing to list with NEO.
Ether Capital (NEO:ETHC) is an interesting one.
The company is led by a team of well-known industry professionals, and it aims to invest in projects, protocols and technologies that leverage the Ethereum network.
The company makes money in three ways. First, it provides consulting services to those in the space. For example, it has acted as a consultant to Purpose Investments and helped launch the Purpose Bitcoin and Purpose Ether ETFs, which allow Canadians to hold cryptocurrency in CAD and as an added bonus, can tax shelter the holding.
Secondly, the company is investing in the development of technologies which are aimed at decentralized application adoption.
Third, and perhaps most importantly, the company acts as an asset manager for several crypto holdings – primarily Ether. As of writing, the company had approximately $239M of ETH, $7.7M of Maker Dao and $1.8M invested in Wyre – a cryptocurrency exchange platform.
In comparison, the company only has a market cap of $168M. That means, it is trading at a 42% discount to ETH holdings. While most asset management firms do trade at a discount to assets due to overhead costs, the big gap here is unwarranted.
It is likely why the company announced an NCIB in late November. The company’s shares are undervalued, and management recognizes this. How can you take advantage? Whenever the discount to ETH assets is greater than 30%, it provides an attractive risk-to-reward prospects.
Of course, this stock will be dependent on Ethereum but so long as one is bullish on ETH, Ether Capital has the potential to deliver outsized returns.