Bitcoin stocks are possibly the dumbest bitcoin play

If you believe in Bitcoin, you buy Bitcoin. And if you're wary, you stay away. That's about the simplest way of calculating your investment options when it comes to the world's most infamous speculative bet.

Of course, you can join the hoards of Telegram and Reddit groups claiming to understand and predict the twists and turns in the cryptocurrency's price, making you just that much smarter than everyone else. Well done.

But there is another option: invest in stocks of Bitcoin-related companies, including those that supply the "miners" - the computers that solve the complex algorithms which underpin the cryptocurrency network. That is, buy shovels in a gold rush.

That could be the dumbest bet of all, though.

Take Canaan Inc. the largest member of the Elwood Blockchain Global Equity Index. The Hangzhou-based company makes chips and equipment used in miners. You'd think that since Bitcoin price, and ergo demand, keeps rising then people would be clamoring to buy more rigs. The major incentive to do so is that if you run such a machine you can yourself get Bitcoin as a reward, and as the price rises the value of such a prize also climbs. It's not working out that way. Canaan's sales in the June and September quarters dropped and it posted four straight quarters of losses. That's over a period in which Bitcoin's price rose a sedate 30 per cent. According to Bloomberg data, there's no sell-side analysts left to even guess at its revenue outlook or share price target. (Bloomberg)