Stocks for the Blockchain Mining Explosion
Let’s be honest: We all want to be the guy going around the cocktail party boasting about the millions he made in his garage.
In the wake of the dot-com bubble, these "garage millionaires" seemed to be everywhere. Many of the companies they've created have grown into Fortune 500s. In fact, I imagine you are familiar with a few:
Sadly, your chance of producing a multibillion-dollar garage company is low. It's hard to produce a winning company in today's hyper-competitive environment. That's why 90% of startups fail.
Not to mention the whole game has changed — "garage" companies now have to compete with massive startup accelerators like Facebook's Station F.
But there is still a way you can make profits without leaving your house.
With this method, you don’t even have to lift a finger — unless, of course, you want to turn on the television while your profits accumulate.
I am talking about digital currency mining, a lucrative process that allows individuals to print legal money on their home computers. Digital currency mining has created a lot of profit opportunities for investors — from mining digital currency to investing in the "picks and shovel" companies fueling the mining boom.
But before we get to all that, let's take a look at the digital currency frenzy that caused it all.
The Digital Currency Frenzy!
At this point, you’ve likely heard of Bitcoin and the fleet of digital currencies it inspired.
Since its birth, Bitcoin's value has increased by over 3,942%. Those kinds of gains seem impossible, but in the world of digital currency, they are normal.
No one could have ever guessed Bitcoin would reach these astronomical heights. That is why many early Bitcoin miners sold a bulk of their coins.
Other people sold long before Bitcoin hit its stride. Here's my favorite example: In 2010, one man spent 10,000 bitcoins to buy a pizza. At the time, those bitcoins amounted to $25.
Today they would be worth over $45 million.
Let's just say I really hope that guy enjoyed that pizza...
Other digital currencies are increasing in value as well — many at an accelerated rate when compared to Bitcoin's 10-year growth.
Since the start of 2017, Bitcoin peer Ethereum is up by over 4,675%.
Another digital currency, Litecoin, is up by over 1,280%.
At this point, you may be wondering: Why is such rapid growth just taking place now?
Well, even though many analysts still consider digital currencies a speculative investment, they are finally emerging as a disruptive economic technology.
Digital currencies have the potential to alter the way we conduct business. They can also fix many of the issues in our current financial system. That includes hyperinflation, security breaches, and fraud.
That has caught the attention of major companies, countries, and investors. Ethereum is now backed by a 150-corporation strong alliance.
This has all attributed to massive growth for the digital currency market, which now has a market cap over $150 million.
And individuals have chosen to capitalize on this in a number of ways. Mining remains one very popular way.
As I noted above, people have made incredible profits mining digital currencies from their living rooms.
In fact, in 2009, people reported mining hundreds of bitcoins a day using just two or three computers.
At the time I am writing this, those 100 bitcoins would be worth $470,000.
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The Many Profitable Ways to Take Advantage of Digital Currency Mining
In order to mine digital currency successfully, an individual has to buy and construct a digital currency mining rig. In the case of Ethereum, this rig requires specific hardware, including a graphics processing unit (GPU).
For Bitcoin, mining requires hardware called ASIC chips. ASIC chips are more specialized.
Also, because of an increasingly more difficult algorithm, fewer bitcoins can be mined from the Bitcoin network. This means many miners are opting for the less-specialized GPU mining method.
There are various resources on the web that teach people how to construct mining rigs. Considering this readily available information, companies supplying the necessary hardware have witnessed a massive uptick in demand for GPUs.
In fact, demand is so high that the world is currently experiencing a GPU shortage.
Companies can barely keep GPUs on the shelf.
One such company is Advanced Micro Devices (NASDAQ: AMD).
On August 18th, AMD witnessed its new graphics card Vega 56 sell out in a matter of minutes. Heavy demand for the graphics cards influenced the company's second-quarter 2017 earnings.
AMD reported $1.22 billion in revenue, marking a 19% increase from the previous year.
A large portion of that growth came from the company's computing and graphics segment, which was up over 51%. In its earnings report, AMD acknowledged this increased demand came from digital currency miners.
Analysts were admittedly speculative, considering digital currency is still an unproven source of long-term revenue for companies like AMD.
This speculation can be countered by the fact that digital currency mining is a slowly evolving endeavor.
These companies will likely see heavy demand — if not from individuals, then from major corporations and countries moving into the digital currency mining space.
That said, individual demand for mining equipment is still high, especially from small countries whose occupants seek to use Bitcoin mining as a hedge against hyperinflation. For instance, The Atlantic published an article in its September issue highlighting Bitcoin mining in Venezuela.
Venezuelan citizens can operate small Bitcoin mining setups and make $500 a month, a relative fortune in Venezuela, where hyperinflation has reduced the country's fiat currency to practically nothing.
So How Do You Profit from Mining?
The digital currency market has seen a record year.
Ethereum and Bitcoin have both made investors triple-digit gains this year.
And, outside of the handful of digital currencies I mentioned above, dozens of digital currencies have made similar gains.
That means there are quite a few ways for investors to capitalize on the market.
You can educate yourself and construct a digital currency mining operation.
If that's too technical, you can take advantage the traditional way: by investing in companies like AMD that supply "picks and shovels" to this booming sector.
Or you could join the fleet of investors buying digital currencies like Bitcoin, Ethereum, or Litecoin.
If you are interested in learning how to trade digital currency, you can see our digital currency trading tutorial here.
Best of luck with your investments,
@AlexandraPerryC on Twitter
Alexandra Perry is a contributing analyst for Wealth Daily and Energy and Capital. She has multiple years of experience working with startup companies, primarily focusing on artificial intelligence, cybersecurity, alternative energy, and biotech. Her take on investing is simple: a new age of investor can make monumental returns by investing in emerging industries and foundational startup ventures.
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