Cryptocurrencies are popular these days, especially since traders see stories circulating about people making huge profits from tokens. The Winklevoss twins, famous for their participation in Facebook social networking site$3 billion, all By investing in Bitcoin (CRYPTO: BTC). Two other early cryptocurrency investors, Michael Saylor and Matthew Rusak, have earned $2.3 billion and $1.5 billion, respectively. Tales like this make it hard to resist the urge to invest a little money in this direction.
Now, on the other hand, most people don’t fill their retirement portfolios with highly volatile investments unless they are both ambitious and have a long time to beat the crazy volatility. On the other hand, even investors in their early years need some exposure to growth assets, and cryptocurrencies have a lot of potential for big gains.
To this end, we asked three Motley Fool contributors to share one investment each in the cryptocurrency space they would like to add to their retirement portfolios. Their choices: Coinbase Global (NASDAQ: currency)And Hut 8 Mining (NASDAQ: HUT), and the Serene Nasdaq Nexgen Economic Fund ETF (NASDAQ: BLCN).
Eric Folkman (Coinbase Global): One effective way to play into the cryptocurrency trend is to buy shares in a company that earns transaction fees from the trades of all the major tokens. Say hello to Coinbase Global, the operator of one of the world’s leading cryptocurrency exchanges.
Coinbase’s results have soared along with the popularity of cryptocurrencies. Driven almost entirely by trading revenue, its top streak ballooned from $178 million in the second quarter of 2020 to nearly $500 million in the fourth, and then to $2.03 billion in the second quarter of 2021. The number of users transacting monthly has also risen dramatically. Big across that span, from 1.5 million to 8.8 million.
And like other stock exchange brokers – which bear little, if any, investment risk of their own – Coinbase has been very profitable. It continues to post impressive bottom line results, and the net profit margin continues to rise. It had net income of over $1.6 billion for the second quarter, the latest reported period.
Granted, cryptocurrency the The assets are burning in finance these days, and a lot of that growth is trend-driven. In addition, Coinbase remains a broker first and foremost. Since almost all of its revenue is derived from fees, it is highly dependent on trading volume.
But it is still early days for cryptocurrency and blockchain, and the coming years will bring more new products and services. Already, Coinbase is looking to take advantage of next-generation offerings related to such assets: it’s launching an NFT service called, not all so creatively, Coinbase NFT.
The company describes it as “a peer-to-peer marketplace that will make minting, buying, displaying, and discovering NFTs easier than ever before.” Since such activities are not necessarily convenient or easy yet, this is sure to attract customers eager to pay to this growing aspect of blockchain technology.
In the search for new ways to earn coins from Bitcoin and the like, the company establishes important partnerships with top companies. Earlier this month, it announced its partnership with Facebook social networking site To provide custodial services for the social media giant Novi digital wallet, which is currently in its beta phase.
Coinbase clearly has a future, but some investors and analysts are concerned about the stock. The median forecast of analysts is a decline in both revenue and profitability in 2022; Many clearly believe that the temperature will drop in the currently hot market for cryptocurrencies. This view helped keep Coinbase’s share price below its initial public offering level earlier this year.
But smart investors pounce when sentiment is low. We can expect cryptocurrencies and blockchains to become increasingly vital parts of the global financial fabric. As they do, this company will benefit greatly…and most likely for a very long time.
Environmentally friendly miner
Barbara Eisner Bayer (Cottage 8 Mining): About eight years ago, I was visiting a 20-year-old friend who was gushing about Bitcoin and the future of cryptocurrency. He said it was time to buy and insisted it would be the next big thing. I walked away from that conversation and closed my eyes, laughing at his naivety, thinking this was going to be the next tulip madness. I couldn’t wait until the day I would be able to say, “I told you so!”
Fast forward to today, and guess who’s laughing now? In October 2013, the value of one bitcoin was $196.02 USD; As of October 27, 2021, one bitcoin has been sold for about $60,400. My friend got married and had a baby, and thanks to his early bets on the trend – he has a health savings account.
While I still think that cryptocurrencies, in general, are too risky to hold in a retirement portfolio, I have recently been looking for a way to invest in the crypto space. After all, even retirees need to hold assets that can continue to grow in value, at least enough to keep up with inflation. I would like to look to the future when it comes to my investments.
Finally, I found one that I think is a perfect fit for me: Hut 8 Mining.
I love Hut 8 because it is involved in Bitcoin mining, the great father of tokens. One of the big problems with mining most cryptocurrencies is that the process uses a boatload of electricity, leaving a huge carbon footprint and harming the environment. This means that getting involved in it financially doesn’t fit well with my place philosophically – unlike many of the alternative energy stocks I currently own.
But Hut8, which operates from Alberta, Canada, spares me the ethical dilemma. Its mining rigs are powered by a combination of natural gas, wind and solar energy. It costs the company just $0.022 per kilowatt-hour to do the mining — one of the lowest among its competitors.
If you’re not sure what effect all this digital will have on the real world, consider this: a single Bitcoin transaction consumes as much as 1.2 million electricity. Visa Transactions!
Anyway, Hut 8 is an off-the-cuff game on Bitcoin itself, with the company mining between eight and 12 tokens per day, which are worth between $500,000 and $800,000 at current token prices. It also considers the interests of its shareholders. As my colleague Zhiyuan Sun wrote earlier this month:
Now, he [HUT] She owns about 4,450 BTC, valued at about $219.5 million, but unlike other miners, she does not plan to simply sell them as soon as possible. To maximize shareholder returns, Hut 8 is lending BTC it miners. Coin holders can get interest of up to 6.20% per annum on bitcoin lending, based on current prices.
Finally, Hut 8 is investing in its future by upgrading its systems and adding more power generation capabilities, which will eventually allow it to operate additional mining rigs, boosting revenue and profits.
For me, this was the right stock at the right time to add to my retirement portfolio. But if you want to add it to your investments, keep in mind that like all cryptocurrency investments, it is very volatile. If you are not comfortable seeing your investment go up 5% one day and go down 4% the next, this may not be your option. But if you can tolerate some extreme price swings, this might be the perfect crypto stock to add to your retirement portfolio.
When you can’t pick one winner – consider the ETF
Chuck Salita(Seren Nasdaq Nexgen Economic Fund ETF): I will be the first to admit that I do not have cryptocurrency. Tokens are very volatile – and as their massive proliferation demonstrates, it seems very easy to create them to be a serious alternative to currency.
For something to function as legitimate currency, it must hold its value at least reasonably against a basket of goods. The massive rallies and crashes in cryptocurrencies make it difficult to describe them as stores of value, even when compared to the gradually diminishing purchasing power of the dollar over time due to inflation.
In addition, while for some individual cryptocurrencies there are strict limits on the total amount of tokens that can be mined at any one time, there are more than 6,800 different types of tokens now, and the number continues to grow. This makes it even more difficult to believe that there will actually be enough scarcity in the concept to enable any given token to retain its value over the long term.
This is where the Siren Nasdaq NexGen Economy ETF comes in handy. It designs itself as an index fund that invests in companies that use blockchain technologies in their operations. Blockchain is the basic technology behind cryptocurrencies. If nothing else, the current popularity of cryptocurrencies is making blockchain-focused companies something of the modern equivalent of buying the “picks and shovels” game during the gold rush.
As an index-focused fund, the Siren Nasdaq NexGen Economy ETF does not have to sort winners from losers. Given the uncertainty involved in the space, that’s a good thing. It’s also what makes the cryptocurrency investment I’m considering buying for my wallet. If I want to invest in something and I don’t understand it well enough, index-based investing is my favorite way to get financial exposure without necessarily building experience.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.