2 days ago · Bitcoin has been a hot topic in the investing world recently, and it isn't hard to see why. The leading cryptocurrency recently hit a fresh all-time high and is up by about % so far in Nov 21, · Bitcoin approaches new highs Even as the stock market fell, bitcoin continued its amazing ascent. The price of the premier crypto token touched $10, as Author: Dan Caplinger. Dec 22, · So what. Bitcoin hit its all-time high over the weekend, while the stock market was closed. Since cryptocurrency-miner stocks tend to follow the price of bitcoin Author: Jon Quast.
How is bitcoin doing in the stock marketThe Stock Market Is Falling. Is Bitcoin the Answer? | The Motley Fool
This makes bitcoin a highly speculative asset to own. If you're a believer in the long-term use cases for bitcoin, another way to play it would be to buy a stock that could make billions if bitcoin does well, but that will be just fine if it doesn't. There's no denying that Square's bitcoin operation has been very successful.
It could stand to benefit dramatically if bitcoin's price keeps rising, or if the digital currency achieves widespread merchant acceptance. The point is that Square doesn't need those things to happen. At its core, Square is still a payment processing business. It has grown dramatically over its decade-long history.
In addition, Square has built a nice business lending operation in the form of Square Capital, which has originated billions of dollars in small business loans. It does this at a much lower credit risk than its peers, since its loans are based on merchants' sales. Square received approval for a banking charter of its own in , and the company plans to launch its own industrial bank next year. Finally, there's the Cash App, which offers so much more than bitcoin.
The app provides person-to-person payments, the ability to buy and sell stocks, and debit cards. Cash App's user base has quadrupled over the past three years.
More than 30 million people actively use the platform, which is still in the relatively early stages of monetization. In a nutshell, Square's growth story has been impressive so far, but it could still have more room to grow. That's true with or without bitcoin. In the corporate world, there are few people who believe in the long-term potential of bitcoin more than Square CEO Jack Dorsey.
There's no denying that Square's non-crypto business growth is extremely impressive, to say the least. If you believe in the long-term potential of bitcoin as an asset, but don't necessarily want your investment results to be only dependent on bitcoin, Square could be a smart way to go. Investing Best Accounts. Stock Market Basics. In other words, its business basically broke even. The price has since more than doubled, increasing Bit Digital's opportunity to profit. Marathon, Riot Blockchain, and Bit Digital all generate revenue by mining bitcoin.
Because the price of bitcoin has more than doubled since September, these companies should start bringing in more revenue and have a shot at higher prices. That's why these stocks go up with bitcoin. Investing legend Warren Buffett once said, "A horse that can count to ten is a remarkable horse -- not a remarkable mathematician.
I personally think this applies to cryptocurrency miners. Don't get me wrong, I like some cryptocurrencies, and I even bought bitcoin and Ether. I see it as a simple case of supply and demand. Specifically, the supply of bitcoin is limited -- and recently we've seen a surge in demand from corporate entities.
This increasing demand coupled with limited supply could keep pushing bitcoin prices higher. So I do believe cryptocurrency prices can continue to rise.
I'm just not sure that bitcoin miners are the best way to invest in this trend. Even if profits for Marathon, Riot Blockchain, and Bit Digital soar in , it's only a matter of time before cash flow would need to be invested in upgrading their equipment.
I'm not sure that leaves much room for creating shareholder value long-term. There are plenty of other cryptocurrency stocks that could hold more potential. But it has powerful hardware that can be used in bitcoin-mining operations as well. In other words, the company could benefit from bitcoin miners buying new equipment, but its business isn't dependent upon that happening.
And I think Buffett would agree that that's a better horse to bet on. Investing Best Accounts. Stock Market Basics. Stock Market. Industries to Invest In. Getting Started. Planning for Retirement. Retired: What Now? Personal Finance.
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