Nobody knows precisely how the current crypto bear market will end. Some commentators argue that crypto is just a giant Ponzi scheme that offers investors no real value, while others say that it’s the future of currency, and point to countries like South Korea, that are already actively pursuing it.
If cryptocurrencies do take off, then there are plenty of opportunities for dividend investors in purchasing the companies that will be at the forefront of the movement. Although dividend investing is typically associated with legacy companies that don’t have much more scope to grow, there’s a growing sense that investing in newer, crypto-related companies, could produce decent dividend returns.
The Server Market
The first place to look, of course, is the server market. Crypto service providers and miners need server space to carry out their operations. Without it, they cannot compete in the global market, and cannot make money from any potential crypto revolution.
There are already a number of large, successful players in the server market. Microsoft offers its Azure service. Google is in the game. And Amazon Web Services is a clear market leader. If the crypto craze does take off again, as it did in 2017, you can bet that this will have an impact on the dividends paid by these giants, even if their product portfolio is heavily diversified.
The Ancillary Services Market
Crypto is a new asset class which automatically makes it a little bit tricky to understand. But when you combine that with the fact that the majority of the public are utterly uneducated when it comes to crypto (or most financial assets for that matter), then you can see that there’s a tremendous opportunity for savvy entrepreneurs to bridge the information gap.
We already see this with offerings like DoWallet, but in the future, consumers will need a range of powerful tools that will allow them to interact with the crypto technology. Right now we are with crypto about where the internet was in the mid-1990s, with many opportunities in the consumer space yet to be realized.
The GPU Market
There are three major players in the GPU market: Nvidia, AMD, and Intel. Intel and AMD are both legacy companies, and so provide an opportunity for investors interested in crypto to earn a dividend. Both have suffered recently because of the fall in the value of cryptocurrency, though neither as badly as rival Nvidia which recently saw 40 percent knocked off its share price and rising dividend yields.
If bitcoin or another cryptocurrency recovers, then it could signal the beginning of a second GPU boom. Miners need GPUs to “mine” new crypto assets, thanks to their substantial parallel computing abilities. If the price of bitcoin or another currency goes up, that will increase the demand for GPUs, which in turn will put the price up. Nvidia saw record profits in 2017 and 2018 because it was able to charge more for its limited supply of GPUs.
Although it’s not for everyone, there are opportunities to make a good dividend income off the back of opportunities in crypto. Buying the supporting companies might be a smart move.
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