Canadian Crypto Stocks Compared (Pros & Cons)

In this article, let me talk about the Canadian crypto mining companies and stocks. The contenders are Hive Blockchain, Hut 8 Mining Company and Bitfarms. 

All the three companies listed above have their headquarters in Toronto, Canada and mine Bitcoin and Ethereum. 

With the Bitcoin price hitting an all-time high of $58,000 USD recently and Ethereum past $2000 USD per coin, the sky is the limit for these crypto mining stocks. 

First, we have the Hive Blockchain which mines both Bitcoin and Ethereum. 

Next, you have Hut 8, which mines Bitcoin alone. 

Then we have Bitfarms, which mines Bitcoin. 

I’ll try to compare these three prominent Canadian crypto mining companies in this article.

Let’s begin. 

Bitcoin

Hive Blockchain

First, let’s start with Hive Blockchain. 

Frank Holmes is the man behind Hive. He’s on every investor’s call answering your questions and is extremely active in taking decisions for the company. 

Pros of Hive Blockchain

  1. First, Hive mines Ethereum more than Bitcoin. With the price of Ethereum almost reaching $2000 USD, Hive should be making almost $500,000+ gross profits per day by mining Ethereum alone. Remember, by gross mining margins I mean, mining revenue minus electricity and operation costs. 

  2. Next, Hive Blockchain recently upgraded its Ethereum GPU chips from 4GB to 8GB to further enhance its Ethereum mining and reduce mining difficulty. 

  3. The company has extremely low locked-in electricity rates in Europe (Sweden and Iceland) where the company mines Ethereum. In Canada, through GPU One facilities the company mines Bitcoins as well. 

  4. Hive Blockchain has already ordered Bitcoin miners and on its way to reaching 2 Exahash/s by the end of the year.

  5. Hive further plans to increase its Ethereum mining by 30% starting April of this year. 

  6. In case you don’t know, Hive is the only company in the crypto mining space at the moment that is profitable as per their previous quarter results. 

  7. Last but not the least, Hive is listed on the Canadian and the US stock markets. Though it’s on the TSX-V and OTC markets, nonetheless it is listed on both the major markets (Canada and US).

  8. Hive further plans to be listed on the Asian stock markets to enhance the liquidity and volume of its stock. 

Cons Of Hive Blockchain 

  1. As I said, Hive is majorly into Ethereum mining, and with Ethereum mining comes the risk of proof of stake.

  2. That is you may not be able to mine Ethereum in the future at all. This might happen with Ethereum 2.0, which is unknown still (I mean the release date). In case this happens, Hive will have to figure out a plan on what it will do with the Ethereum coins it holds and what it will do with all the hardware it has for Ethereum (GPU chips). This is not the case with Bitcoin miners. 

  3. Though Hive trades on the TSX-V and OTCQX market in the US, it’s still not trading on the main TSX and NASDAQ or NYSE (major exchanges) which will further boost the trading volume of the stock and liquidity even further. 

  4. Hive Blockchain keeps diluting its shares to enhance the mining capability, which is not good for the shareholders. The company currently has around 350M+ outstanding shares which will hurt the EPS down the road. 

  5. While Hive has an active Bitcoin miner order for the rest of the year, it is still waiting for the Bitcoin Miners to arrive every month (to arrive and install), which can probably be very late with Bitcoin prices going crazy right now. Don’t get me wrong, they mine Ethereum which is still profitable but they are missing out on the Bitcoin bull at the moment with prices this crazy.

  6. Also, the company sold a ton of its Ethereum to upgrade the GPU chips, so not sure about their Ethereum+Bitcoin holdings right now. 

Crypto Mining

Hut 8 Mining Crypto Company 

Hut 8 is one of the best Crypto and Bitcoin mining companies in the world! The company is headquartered in Downtown Toronto. Jaimie is the CEO and Sue Ennis head of IR. Sue is particularly active on the ST channel and Yahoo boards. You can always bank on her to reply back to your email with answers to any of the questions you have. 

What I really like about Hut 8 is how well the company operates and manages to utilize the existing resources and bandwidth to optimize the balance sheet for further growth. 

Hut 8 Pros

  1. HODL HODL and HODL: Hut 8 along with RIOT Blockchain (US) were amongst the first few companies in the crypto mining world to hodle the coins mined and benefit from the ever-increasing bitcoin prices through revaluation gains.

  2. Hut 8 currently holds close to 3100+ Bitcoins which alone after revaluation gains will be valued around 190M USD. The next quarterly results are going to be big-time in March. 

  3. The company currently mines around 200+ Bitcoins every month or 6+ coins per day. (At current difficulty rates)

  4. At the current Bitcoin prices, the company is easily making $350,000+ revenue every single day.  By revenue, I mean gross profits after deducting the costs associated. 

  5. The stock, even after the huge rally (300%+ this year alone) is still extremely undervalued at $10.92 Canadian and Forward PE of around 5. 

  6. Hut 8’s management team is extremely strong on social media in answering all your questions and plans to up-list on NASDAQ soon. Hut 8 already trades on TSX senior market at the moment. 

  7. The stock currently trades on the TSX stock market and OTCQX in the US. 

  8. Furthermore, Hut 8 has an extremely low debt when compared to Bitfarms and fewer outstanding shares compared to Hive Blockchain.

  9. The company currently has around 115M outstanding shares. 

Hut 8 Cons 

  1. One of the immediate cons I can think of Hut 8 is Bitfury.

  2. Bitfury, as a company-provided Hut 8 with the Black Boxes at the Drumheller and Medicine Hat facilities where Hut 8 Mines its Bitcoins.

  3. Both these locations are based out of Alberta, Canada. Because of the Btifury agreement, Bitfury holds a ton of shares of Hut8 (almost 30% of the total outstanding shares) and is increasingly selling it out in the open market due to the increased share price.

  4. Last week alone Bitfury sold close to 8M shares further bringing down the Hut 8 share price to red. Right now after all these sales, Bitfury still holds around 17M shares of Hut 8. BTW, Hut 8 does not have any more active contracts with Bitfury right now, they terminated the contract long back further bringing the costs down and saving money on the balance sheet. 

  5. As I said in the Pros, Hut 8 stock is currently listed on the TSX in Canada, which is fantastic.

  6. But in the US the stock is still listed on the OTC markets. Though that’s better than not being listed at all, the company plans to get listed on NASDAQ like its peers MARA and RIOT to see the big volume jump (Robinhood folks!). ETA on the uplist is not known for when this will be done, due to the regulator approvals. 

  7. Hut 8’s operation efficiency is not as good as Hive or Bitfarms (its Canadian peers). The company still needs to make optimizations to meet better revenue margins (gross profits I mean). 

  8. Finally, this is not a con really, but still, Hut 8 is only into Bitcoin mining and does not mine any other Crypto coins like Hive, missing out on the run-up (Ethereum especially). 

Crypto Mining

Bitfarms 

Bitfarms by far is one of the best premium Crypto and Bitcoin mining companies in Canada. The company is managed and run extremely well. 

Moreover, The stock is extremely undervalued right now for the P/S and P/E ratios. 

Whether you compare the current P/E ratios or to the future Bitfarms is very undervalued and has massive opportunities to grow further. The stock can in fact double or triple in my opinion over the next few days. 

Pros Of Bitfarms

  1. Operation Efficiency: Bitfarms has the best-operating margins and mining efficiency in the crypto space when compared to Hive or Hut 8 even. The gross profit margins are almost a stunning 89%, which is exceptional. 

  2. Probably, The reason for the high gross margins is because Bitfarms has their own engineers on-site and does everything groud up by their internal team (Volta). So, any maintenance issues or miner needs to be replaced they have hands-on right at the site. 

  3. Bitfarms currently mines around 7 Bitcoins per day (without the expansion) and at these prices, they are making close to $400,000+ USD in net revenue. 

  4. The stock currently trades at around $8 per share (Canadian), which is extremely low for the revenue they make at a Forward P/E of around 3.21. 

  5. Bitcoin Retention Program – Bitfarms recently started the Bitcoin Retention Program (starting Jan 1st).  Through the program, the company Hoddle’s BTC’s and plans to sell only when the price is higher than the mined costs and only when required to convert to fiat currency.

  6. Moreover, Bitfarms plans to increase its BTC holdings to 500+ in the next 30 days. The company currently mines around 210 coins per month, all Bitcoins. 

  7. With the recent expansion plans, the company is increasing its hasrate to 1.3 Ex/s, or mine 9 Bitcoins per day. At the current Bitcoin price of $50,000, the revenue will easily be around $450,000 with this expansion.

  8. Bitfarms stock trades on the TSX-V and OTC markets in the US.

Cons Of Bitfarms 

  1. Company Debt – Compared to Hut 8, Bitfarms has a huge debt of around 30M dollars in the balance sheet (as per the previous quarter).

  2. Though the company has recently mentioned that it has reduced its debt because of the multiple offerings it did, we still need to wait for the dollar amount to make sure what the outstanding debt really is. 

  3. Outstanding Shares – Bitfarms has around 130M outstanding shares (after all the offerings it did), which will hurt the EPS, as Bitcoin prices rise further and revenue increases. 

  4. Bitcoin mining equipment lease – Bitfarms was into the Crypto Mining equipment lease, so not sure if they are still leasing the equipment or have purchased all the M31 ASIC miners. 

  5. Resignations from some of the founders and board members- Bitfarms was recently in the news for resignations from some of its founders/directors which is not a healthy sign for any company. 

  6. Finally, the crypto mining stock company is currently listed on the TSX-V and OTC markets, which is not the best for the volume or liquidity of the stock. Not everyone likes owning stocks in OTC markets, the company plans to uplist on NASDAQ soon, but not sure when as it all depends on the regulator’s approval. 

Bitcoin

Final Words

There you go, that was my review on the Canadian Crypto mining stocks. 

As mentioned, all three companies listed in this article are extremely undervalued at the moment when you compare them with their US counterparts. Be it MARA or RIOT (Both $4B+ MCAP).

While Hive is definitely raking in more profits compared to Bitfarms or Hut 8, the other two are quickly catching up as well. 

The final choice in picking the stocks is totally dependent on what you want and which one you feel is right for your portfolio exposure. 

But, if you ask me what I would do given these choices, I’d say invest in all these three Canadian stocks to reap the maximum benefits (and invest in an equal proportion of your portfolio, remember dollar-cost averaging to skip FOMO).  Say, 5% of your total portfolio should be less risky and good overall. 

That’s all for now. Thanks for reading. Please let me know your thoughts and comments below. 

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