2 Crypto Stocks to Buy Hand Over First
Key Points
Bitcoin has rallied tremendously long-term, but higher returns may come from smaller companies in the industry.
Robinhood isn't exactly small, but its high revenue growth and expansion into prediction markets present a compelling opportunity.
Cipher Mining's crypto infrastructure gives it a unique advantage as it pivots into AI data centers.
- 10 stocks we like better than Robinhood Markets ›
Bitcoin (CRYPTO: BTC) has outperformed the S&P 500 over the past decade, but the next wave of returns may come from cryptocurrency stocks. These corporations have positioned themselves to benefit from rising crypto prices and present long-term upside for investors. They also have much lower market caps than Bitcoin, which means these stocks can double more easily than Bitcoin.
However, some companies have announced blockchain initiatives just to ride the frenzy. For instance, Eastman Kodak (NYSE: KODK) spiked in 2018 after announcing a crypto venture, but it ended up going nowhere.
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The two crypto stocks on this list are different. They have been producing real revenue and profits for several years, with crypto acting as one piece of their overall business models. I think these are the top two crypto stocks to consider.
Image source: Getty Images.
This fintech company is achieving rapid growth in crypto and other areas
Growth investors look for stocks that can achieve impressive revenue growth rates while boosting profit margins, and Robinhood (NASDAQ: HOOD) checks both boxes. Crypto has been a major catalyst for the fintech company, with crypto transaction revenue surging by over 300% year over year in the third quarter.
However, Robinhood is far from a crypto-or-bust stock. Transaction-based revenue increased by 129% year over year, and that segment includes equities and options. Net interest revenue and other revenue were up by 66% and 100% year over year, respectively, while net income soared by 271% year over year.
Those growth rates give Robinhood enough flexibility to outperform even if the crypto market slows down. However, the company's investments in the prediction market may become the next tailwind that accelerates transaction-based revenue.
Robinhood's Chief Financial Officer Jason Warnick told investors in the Q3 earnings release that Q4 is off to a good start. He mentioned "record monthly trading volume across equities, options, prediction markets, and futures, and new highs for margin balances" in October, which increases the likelihood of strong Q4 earnings.
Robinhood is positioning itself as the go-to place for all investment and speculative opportunities. Some people buy and hold their assets on Robinhood, while others view it as a digital Las Vegas.
This crypto miner is signing lucrative deals with big tech
Artificial intelligence (AI) is scorching hot due to its current successes and long-term potential. Nvidia (NASDAQ: NVDA) became a multitrillion-dollar company because it produced the best AI chips in the stock market. It's easy to forget that Nvidia was a crypto stock before it became an AI stock, so we do have past experience of a crypto stock becoming an AI stock and producing tremendous returns in the process.
Cipher Mining (NASDAQ: CIFR) looks like the next opportunity. The company's crypto mining infrastructure gives it a unique advantage when creating AI data centers. It already has chips and energy, the big AI bottleneck, to facilitate big deals.
Some of those deals have already happened. A 10-year deal with Fluidstack for $3 billion, backed by Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google, captured investors' imaginations. The two companies struck an additional deal just a few months later.
Cipher also announced a 15-year deal with Amazon (NASDAQ: AMZN) worth $5.5 billion when discussing Q3 results. These three deals have used up only a combined 524 megawatts of Cipher Mining's energy. The crypto miner has a pipeline of 3.2 gigawatts (3,200 megawatts), which gives it the flexibility to support several big tech deals.
AI data centers and megawatts are in hot demand due to the intense energy requirements to run AI technology. Right now, AI models like ChatGPT and Grok are gaining momentum and have significant energy requirements. However, autonomous vehicles and robots will also require this type of energy. Any surge of popularity among these products will require more energy and data centers.
Cipher Mining is uniquely positioned for this opportunity, and it's still a small company with a market cap of below $10 billion. This small crypto play has the chance to rally significantly if it can secure more deals in 2026 while expanding its multi-gigawatt pipeline.
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Marc Guberti has positions in Cipher Mining. The Motley Fool has positions in and recommends Alphabet, Amazon, Bitcoin, and Nvidia. The Motley Fool has a disclosure policy.
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