If you’re kicking yourself for not investing in Bitcoin when you first heard about it, you’re not alone.
Buying Bitcoin is not a straightforward process.
And the earlier you heard about it, the harder it was to buy.
It’s easier than ever before today – but it’s still not that easy.
You have to set up a new account at a specialized cryptocurrency exchange with an unproven long-term track record.
You have to verify your identity, bank account information, and jump though a whole host of other hoops.
But fortunately, you don’t have to buy Bitcoin itself to participate in its upside.
That’s right.
You can buy stocks that have a high correlation with Bitcoin using whatever brokerage platform you’re already using (Robinhood, eTrade, Charles Schwab, etc.) and still capture similar returns.
The companies I’m bringing you today are mining for Bitcoin, investing retained earnings into Bitcoin and holding it on their balance sheet, and even acting like a Bitcoin ETF.
The best part is – they go up when the price of Bitcoin goes up, and you don’t have to worry about setting up a new account at a cryptocurrency exchange.
Here are the three best Bitcoin stocks to buy now…
No. 3: The Best Bitcoin Mining Stock to Buy
Headquartered in Castle Rock, Colo., Riot Blockchain Inc. (NASDAQ: RIOT) is aiming to be one of the largest and lowest-cost producers of Bitcoin in North America.
Riot mines Bitcoin.
Without getting too into the weeds, that means Riot provides computing power to the decentralized Bitcoin network in order to verify transactions. The company gets paid in Bitcoin when it finds the next block.
This is extremely important, because without miners, nobody could send and receive Bitcoin. And getting paid in Bitcoin is good for Riot so long as the price keeps going up.
The more computing power (the higher the hash rate) that’s supplied to the Bitcoin network, the more valuable Bitcoin is.
Riot Blockchain is one of the best Bitcoin miners on the planet because its headquarters in Colorado allows the company to keep its operating costs lower than most.
You see, one of the largest reoccurring expenses for most miners is air conditioning used to cool down the Bitcoin mining machines so they don’t overheat.
And since Castle Rock sits at an altitude of 6,224 feet, it’s already colder there than most places, so the business saves a lot of money in air conditioning costs relative to its competitors.
The higher the price of Bitcoin goes, the higher RIOT stock will go.
Just last week, as the price of Bitcoin surged past $27,000 per coin, RIOT stock crossed the $1 billion market cap threshold.
Now, with the price of Bitcoin sitting around $34,000, RIOT has a $1.25 billion market cap.
That’s a 25% increase in RIOT stock for a 26% increase for Bitcoin itself.
If Bitcoin goes to $288,000 later this year like we expect it to, you could be looking at a $10.2 billion market cap for RIOT.
That’s a potential 716% return for the best Bitcoin mining stock on the market today.
No. 2: As Close to a Bitcoin ETF as You Can Get
MicroStrategy Inc. (NASDAQ: MSTR) is perhaps the most interesting Bitcoin stock to buy in the world today.
Founded by Michael J. Saylor in 1989, MicroStrategy is a cloud-based computer company that sells its software to businesses.
The company has generated an average of $56.8 million in net income on its free cash flow statement over the last 16 years.
So, it’s quite easy to predict about how much money the business will generate each year in profits.
Before Saylor discovered Bitcoin last February, MSTR stock was worth about $150 per share.
Today, it’s worth 187% more (about $430 per share).
Here’s how we got there (and why it’s not too late to buy the stock)…
On Dec. 5, 2020, Saylor completed the process of transferring his company’s entire balance sheet of $475 million dollars entirely into Bitcoin.
He came to this conclusion by understanding that the M2 money supply is expanding at about 15% per year with no end in sight.
Saylor figured he could let the purchasing power of the cash on his balance sheet wither away… Or he could exchange those increasingly worthless U.S. dollars into the hardest and soundest money the world has ever seen – Bitcoin.
So, over the course of multiple weeks, Saylor purchased 40,824 bitcoins for an average price of $11,635.
Then, he took things one step further…
Saylor issued $650 million worth of convertible debt (at a ridiculously low interest rate of 0.75%) to buy even more Bitcoin.
At an average price of $21,925, Saylor was able to purchase an additional 29,646 bitcoins.
Now, MicroStrategy owns 70,470 Bitcoin for an average price of $15,964 per coin (a total spend of $1.125 billion) that Saylor plans on holding forever.
An amount of 70,470 divided by the 21,000,000 Bitcoin supply cap means that MicroStrategy owns a little more than 0.33% of all the Bitcoin that will ever exist by the time they’re all mined (around the year 2140).
With the price of Bitcoin currently at $34,000, MicroStrategy has already more than doubled its treasury reserves.
The stock is at all-time highs and will remain that way as long as Bitcoin does the same.
It’s essentially a Bitcoin ETF because the company’s market cap went from $1.4 billion to $4 billion with the purchase of its 70,470 bitcoins.
So, if Bitcoin takes off like I expect it to – MicroStrategy’s cloud business generating $56.8 million in profits annually will be absolutely nothing compared to what the company’s Bitcoin position does…
No. 1: The Best Bitcoin Stock to Buy Now
Speaking of Bitcoin ETFs, the Grayscale Bitcoin Trust (OTCMKTS: GBTC) is technically the closest thing we have to one on the market now.
Founded by tech entrepreneur Barry Silbert in 2013, the Grayscale Bitcoin Trust’s investment objective is to track the Bitcoin market price on a per share basis in its publicly traded investment vehicle trading under the symbol “GBTC”.
And for doing that, the trust charges an annual 2% management fee – which is about how much you’d pay to buy or sell Bitcoin on any crypto exchange.
To date, GBTC has amassed over $25 billion worth of Bitcoin (about 3.8% of Bitcoin’s current supply) for millions of investors who can buy the stock with your average OTC Markets brokerage account (like Ally Bank, Charles Schwab, or Fidelity). It’s really as easy as buying any other OTC Markets stock.
One of the best things about GBTC is that you can buy it in your retirement account (401K and/or IRA).
This is the easiest way to get a tax-advantaged exposure to Bitcoin.
One of the biggest reason investors don’t sell for a profit is to avoid the hefty tax burden.
But when you sell GBTC in your retirement account, you don’t have to pay capital gains taxes on that transaction.
Every investor interested in participating in Bitcoin but who doesn’t want to go through the complicated steps of opening an account at a cryptocurrency exchange like Coinbase, Voyager, or Kraken, should take a serious look at the Grayscale Bitcoin Trust.
— Money Morning Staff
Source: Money Morning