Blockchain and cryptocurrencies have been kicking around for a number of years now but the space has seemingly come into its own in 2021 as digital assets gain more legitimacy in the eyes of traditional financial institutions and the price of Bitcoin and Ether continue to rise in value.
And Canadian-listed companies are playing a part in establishing the sector, with a number of fintech names now making their presence felt. Here, Cantech Letter gives investors the lowdown on the contribution from Canadian exchanges to the crypto world.
(1) Voyager Digital (Voyager Digital Stock Quote, Charts, News, Analysts, Financials TSX:VOYG)
Voyager Digital was founded in 2018 and has its headquarters in New York, with the digital asset and financial services company giving users of its platform access to over 65 crypto assets for trading and earning interest on cryptocurrency deposits. The company also has a crypto payment solutions via its subsidiary Coinify ApS, acquired in August, while the company is also launching a crypto-based debit card which acts like a chequing account with nine per cent in annual rewards.
Voyager’s share price has been up and down since its debut on the TSX in early September and is currently at about even for the two-plus months at around $20.00. But Analyst Adhir Kadve of Eight Capital thinks there’s lots of upside to be had on the name. Kadve recently delivered a report to clients where he reasserted his “Buy” rating for VOYG and raised his target price from $20.00 to $31.00, saying the stock is trading at a significant discount to its fintech peers, notably Coinbase which Kadve says is currently trading at 9.5x 2022 EV/Revenue versus Voyager at 4.2x.
“Voyager continues to deliver on a well-defined user acquisition strategy which is rooted in increasing marketing spending, product rollouts and geographic expansion. We have increased our target price on increased forecasts on the back of updated guidance the company issued and we are maintaining our BUY Rating,” Kadve wrote in a November 17 report.
(2) BIGG Digital (BIGG Digital Stock Quote, Charts, News, Analysts, Financials CSE:BIGG)
Cryptocurrency investment firm Vancouver-based BIGG Digital has two primary businesses in Netcoins, an online cryptocurrency brokerage, and Blockchain Intelligence Group, a compliance and intelligence company for the cryptocurrency industry. BIGG had a huge run-up earlier this year where its share price went from $0.50 to $4.00 in the space of a couple of months, but the stock has since pulled back and trades around the $1.50 mark with still plenty of volatility.
On the business side, BIGG’s Netcoins scored a win in late September when it received a Restricted Dealer license from Canadian regulators, essentially making it one of a small handful of licensed cryptocurrency platforms in Canada.
PI Financial analyst Kris Thompson said in a September 30 report to mark the event that Netcoins is set to become one of the Canadian incumbents in the space as smaller operators will have trouble catching up and obtaining the required licensing. With the report, Thompson reiterated his “Buy” rating for BIGG Digital and $3.00 target, which at the time of publication represented a projected one-year return of 140 per cent.
“Being the first public company in Canada to obtain this Restricted Dealer license has been the backbone of our investment thesis. BIGG has a strong balance sheet, and armed with the coveted Restricted Dealer license can now pursue an aggressive marketing program to organically grow users and/or to consolidate the industry,” Thompson wrote.
(3) Banxa Holdings (Banxa Holdings Stock Quote, Charts, News, Analysts, Financials TSXV:BNXA)
Headquartered in Melbourne, Australia, Banxa trades on the TSX Venture Exchange and is a payments service provider for digital assets. The company’s platform handles user transactions for cryptocurrency companies and has seen strong growth over the past year, processing over six times the transaction value over its fiscal 2021 (year-end June 30) compared to the previous year.
Banxa has B2B customers in Australia, Canada, Netherlands, Lithuania and through a partnership in the US, while the company partner network is now at 74 compared to just 38 at the time of its IPO in January 2021.
“In the past six months we’ve scaled our teams in anticipation of this, with expanded customer service, operations and technology resources so that we are able to fulfil more orders, and get assets to customers within minutes,” said Banxa CEO Holger Arians in a November 8 press release.
“In the past 12 months we’ve increased our automated throughput of purchases that require no manual intervention by 513 per cent, allowing us to capture a greater share of the market. We’ve also focused on improving the experience of all customers, and the conversion rates of our partners,” Arians said.
Banxa also had a huge surge earlier this year when the price of Bitcoin was rising, with the stock going from $0.90 to as high as $8.19 by mid-March. BNXA is currently trading around $3.50 per share.
(4) Hive Blockchain Technologies (Hive Blockchain Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:HIVE)
One of the longer-listed names in the space, HIVE emerged back in 2017 when the blockchain distributed ledger technology was entering the spotlight. A mining company with facilities in Canada, Sweden and Iceland, HIVE saw its share price soar five years ago on the initial euphoria and then fall back to Earth as the cost of mining coins made business tougher.
But the past 12 months have been equally eye-popping for HIVE, which has again gone from $0.50 territory to now $5.00 — that’s a ten-bagger — and the company seems to be finding its feet at the right time. Earlier this week, HIVE released quarterly results which saw revenue climb 305 per cent year-over-year and 41 per cent sequentially on the back of mining 656 Bitcoin and over 8,688 ethereum coins over the three-month period. That gave the company digital currency assets of $123.1 million as of the end of September and adjusted EBITDA for the quarter of $52.3 million.
HIVE is still growing, too. It’s now putting the finishing touches on two more data centres in New Brunswick and has announced a $100 million capital raise.
“I’m pleased to see our infrastructure investments of the past few years really paying off,” said HIVE executive chairman Frank Holmes in a November 16 press release. “We feel like HIVE is in a fantastic spot to benefit from the current boom in crypto adoption.”
(5) Hut 8 Mining Corp (Hut 8 Mining Corp Stock Quote, Charts, News, Analysts, Financials TSX:HUT)
Another miner paying an incredible return over the past year, Hut 8 has operations in Medicine Hat, Alberta, and is starting up another site in North Bay, Ontario, by the end of this year. The company just passed a new high of 5,000 Bitcoin held in reserve and is now seeing improved production from a new set of Nvidia chips which Hut 8 said are mining at a total cost of “under $3,000 per Bitcoin” for a profit margin of 95 per cent.
The result has been huge strides made by Hut 8, as witnessed by its latest quarterly results, delivered in early November, which saw revenue hit $50.3 million compared to just $5.8 million a year earlier. Adjusted EBITDA climbed high to $30.7 million compared to a loss of $2.5 million last year.
All that good news has been reflected in Hut 8’s share price this year, which at around $17.00 now is up a huge 387 per cent year-to-date.
“The third quarter of 2021 proved to be another exciting and dynamic step forward for Hut 8,” said CFO Shane Downey in a press release. “We are thrilled to have reported our third consecutive record-breaking quarterly results and to have already surpassed our goal of 5,000 Bitcoin held in reserve.”
Disclosure: Banxa Holdings is an annual sponsor of Cantech Letter.