5 Best Crypto Stocks In Canada (Apr 2024): A Disruptive Technology

Bitcoin has become comparable to asset classes like gold, which is astounding considering that humanity has been mining gold for millennia and cryptocurrencies for less than fifteen years.

And that’s not including the infrastructure and equipment market around crypto mining, which is easily in billions.

Despite its volatility, cryptocurrencies and the underlying technologies (blockchain) are not going anywhere any time soon.

Check out the best crypto stocks in Canada below to see if this risky asset class is right for you.

What Do You Need To Know About Crypto Stocks?

The first question most people interested in crypto stocks have is that wouldn’t it be better to buy the cryptocurrency itself directly instead of through a stock.

But there are a few reasons crypto stocks might be preferred over cryptocurrencies:

• They can be kept in tax-sheltered accounts (TFSA and RRSPs).
• Stock investing is familiar, and you may not have to invest anything in their safety like you might do with crypto assets (cold/hot wallets).
• Cryptocurrencies may face some regulatory challenges that crypto stocks might not.
• You might not want direct exposure to a single coin, and buying one crypto stock can spread out your risk.
• You want to invest in other aspects of cryptocurrency technology, such as crypto mining, without actually having to set up your own rig.

Best Crypto Stocks In Canada

There is a decent variety of crypto stocks in Canada. Most stocks represent publicly-traded crypto (primarily Bitcoin) mining companies, but there are some other crypto-related businesses as well.

• Galaxy Digital Holdings (GLXY.TO)
• HIVE Blockchain Technologies (HIVE.V)
• Hut 8 (HUT.TO)
• SATO Technologies (SATO.V)
• Neptune Digital Assets (NDA.V)

1. Galaxy Digital Holdings

Galaxy Digital offers a range of financial services, primarily asset management, all centred around crypto assets.

The company has over $4.6 billion in assets under management, is connected to over a thousand financial institutions, and deals in over a hundred crypto assets. It also markets itself as a blockchain leader (digital infrastructure).

The company offers investors a range of investment opportunities and the bulk of its assets under management fall under two categories – passive and venture. Its client portfolio is over 223 companies. It also has a modest mining operation and over 300 Bitcoins.

Despite the highly volatile nature of the underlying crypto assets and a market that is still struggling to gain mainstream traction, Galaxy Digital has come a long way since 2018 (when it was founded).

It had a few quarters in the green, and if the Q4 2023 results are good, it may end the year in the green as well, but it cannot be called a profitable business yet. The only good thing about its financials is a lack of any significant debt.

Even though it’s not as exposed to crypto assets like Bitcoin and Ethereum as crypto miners are, the performance follows similar patterns.

As a relatively lightweight stock, it reacts quickly to both positive and negative markets, and even a small bull market can easily double its value in less than two months. Insiders own about 3.8% of the company, which shows a decent amount of confidence.

You may consider Galaxy Digital risky, even for a crypto stock, but it’s well-positioned to thrive if crypto assets experience more mainstream adoption and institutional use. It’s all about the timing.

If the company can hold out till crypto adoption picks up at an adequate pace, it may explode and emerge as a big name in the global crypto “economy,” and considering its resilience, I believe it may hold out.

2. HIVE Blockchain Technologies

HIVE Blockchain is among the largest Bitcoin producers in Canada, though if we talk about Bitcoin on the company’s balance sheet, HIVE doesn’t even break into the top ten.

But it stands out from the crowd in a few other ways among other mining giants (as per its own calculations). It has one of the lowest general and administrative costs per bitcoin mined (9%), while Hut8, Riot, and Bitfarms hover between 25% and 30%.

It also offers the least shareholder dilution among its mining peers. The net income has been in the red for the past several quarters, but it can be attributed to the drop in the Bitcoin price.

The losses are still manageable because of low mining costs. The output (based on the past five quarters) generally stays somewhere between 750 and 850 Bitcoins per quarter, which is impressive considering that as more Bitcoins get mined, the complexity of mining new ones increases.

The company has a presence in three countries – Canada, Iceland, and Sweden. Its operations are completely green, and it’s also the first miner to introduce GPu-powered large-scale mining.

It has also developed an impressive GPU “fleet” of over 38,000 Nvidia chips (commercial grade). That kind of computing power is highly coveted for Artificial Intelligence, and it represents the next growth dimension for HIVE.

Performance-wise, HIVE relies heavily on Bitcoin performance and may continue to do so until a substantial segment of its income starts coming from its GPU operations.

Even if the difference isn’t reflected in the performance so much, you shouldn’t think of HIVE as just a Bitcoin miner but one of the most efficient large-scale miners out there. Its financial diversity may allow it to survive even if Bitcoin prices slump quite hard.

3. Hut 8

Hut 8 is one of the largest crypto miners in Canada by market cap and output. It’s also among the top ten companies in the world with the most Bitcoins on its balance sheet, and currently (Dec 2023), it has about 9,366 Bitcoins in reserve. By investing in Hut 8, you can gain exposure to a sizable pile of Bitcoins.

But that’s not the company’s only business. It’s also developing its own GPU fleet/infrastructure but currently only has about 1,000 chips in the portfolio, but it’s just one facet of its High-Performance Computing (HPC) business segment, which produced a quarter of the revenue in Q3 2023.

The other two businesses, managed services and hosting, didn’t generate any income.

Apart from its bitcoin mining capacity and a massive stockpile, its major strength is raw computing power at the company’s disposal.

Despite the bitcoin reserves and mining being the largest business segment, Hut 8 performance doesn’t track the performance/price patterns of bitcoin as faithfully as you may think, but the general trends (bearish and bullish) may still be the same.

It’s also quite close to generating positive net income going forward (consistently). And the insiders trust the company so much that they own 11.5% of it.

You should consider the risk of the volatility of the underlying asset, i.e., bitcoin, but if you want to leverage its upside through a financially healthy and well-managed company, Hut 8 is a powerful pick.

4. SATO Technologies

SATO Technologies is tiny, even for a crypto stock. It has a market capitalization of just $33 million at the time of writing this, making it the first nano-cap on this list. It’s a self-mining companywith a data center in Quebec, Canada. It’s also expanded its range to include High-Powered Computing (HPC) for AI projects.

SATO’s 20 MW and 0.6 EH/s mining hash rate make it one of the smallest publicly traded crypto miners in the country, so it focuses on efficiency. A single facility and 100% owned equipment make it a relatively low-cost business. Therefore, despite its tiny revenues, the losses are minimal and the company generated positive net income for two of three quarters of 2023.

It also generates more Bitcoin per unit of hash rate at its disposal than Hut 8, though HIVE and Bitfarms are more efficient. For most months, salaries and maintenance make up less than 10% of the expenses, and the major mining cost driver is electricity. A few infrastructure investments and better contracts can significantly increase its profitability.

SATO Technologies can be considered a miniature version of Hut 8, but it is more vulnerable. However, as a lightweight, it can also generate higher returns when Bitcoin is bullish. Also, insiders own more than 28% of the company.

5. Neptune Digital Assets

Neptune Digital Assets is another nano-cap (Dec 2023). It’s a bit different from other miners on this list because even though it makes most of its revenues from Bitcoin mining, its other business segments are not related to computing but to staking and Decentralized Financial (DeFi) services.

Staking is basically holding a cryptocurrency for a predefined period of time to earn rewards since it stabilizes the blockchain the crypto is native to. Its staking portfolio includes Ethereum and Polkadot.

Its primary DeFi operation is yield farming, which is essentially contributing to crypto liquidity (through lending/trading pools) for reward/returns, usually in kind.

Even though it’s quite small, it has generated a positive net income in more quarters in the last three years than the larger miners listed above. It also carries no debt.

This makes it financially more appealing compared to other miners. About 5.2% of the company is owned by insiders. You may not find much difference in the performance of Neptune and other larger miners, but its underlying business model gives it more financial flexibility, which is an edge.

It’s also a penny stock (trading for less than $1), which adds to its underlying volatility.

What Is The Best Bitcoin Company In Canada?

HIVE Blockchain, Hut 8 Mining, and Bitfarms are commonly considered some of the best Bitcoin companies in Canada.

How To Buy Crypto Stocks In Canada

The cheapest way to buy stocks is from discount brokers. My top choices in Canada are:

To learn more, check out my full breakdown of the best trading platforms in Canada here.

Conclusion

Although crypto stocks have been popping up left and right, always be cautious when investing in anything related to cryptocurrencies.

As crypto is a highly volatile sector, don’t invest in what you can’t afford.

You may also consider an alternative exposure to crypto-assets, i.e., crypto ETFs.