Best Bitcoin Stocks: Where To Invest Your Money

Bitcoin stocks are publicly traded companies that operate businesses highly exposed to the cryptocurrency market or its underlying blockchain technology. These stocks include crypto exchanges, crypto miners, blockchain technology specialists, and companies with large crypto holdings on their balance sheets. While crypto stocks can be highly volatile, they offer investors a way to gain exposure to the crypto market without directly purchasing cryptocurrencies. With the growing mainstream adoption of cryptocurrencies and the potential for further growth, investing in Bitcoin stocks can be an attractive option for those looking to capitalize on the industry's potential.

Bitcoin mining companies

Riot Platforms Inc. (RIOT)

Riot Platforms is a US-based Bitcoin mining company that focuses on growing its hash rate and infrastructure capacity. The company's mining operations are located in Texas, and its Rockdale facility's 700 megawatts (MW) in developed capacity make it the largest Bitcoin mining and hosting facility in North America. In August 2023, Riot reported a record quarterly revenue of $76.7 million and a record hash rate capacity of 10.7 exahashes per second (EH/s). RIOT shares jumped by 234.8% in 2023, and they closed at $11.35 on August 31.

Marathon Digital Holdings Inc. (MARA)

Marathon Digital is a US-based Bitcoin mining company that operates its own mining pool and invests in mining hardware, firmware, and infrastructure design. The company aims to improve mining efficiency by integrating its own technology. In Q2 2023, Marathon reported $81.8 million in revenue and a 314% year-over-year increase in Bitcoin production. MARA stock is up 267.5% in 2023, closing at $12.57 on August 31.

Cipher Mining Inc. (CIFR)

Cipher Mining is a technology company that develops and operates Bitcoin mining data centres in the US. In August 2023, Cipher reported a record self-mining hash rate capacity of 6.8 EH/s in Q2 and plans to increase it to 7.2 EH/s in Q3. The company also intends to complete its Odessa facility in Texas and explore additional expansion opportunities. CIFR shares have gained 469.6% in 2023, trading at $3.19 as of August 31.

Hut 8 Mining Corp. (HUT)

Hut 8 Mining is a Canadian digital asset mining company with two mining facilities in southern Alberta. The company has 36,000 square feet of geo-diverse data centre and cloud computing capacity and uses emission-free energy sources. In August 2023, Hut 8 opened a shareholder vote on its plan to merge with US Bitcoin Corp. to create New Hut, which would have 7.5 EH/s of installed self-mining capacity and 825 MW of total power under management. HUT shares are up 185.9% in 2023, closing at $2.43 on August 31.

TeraWulf Inc. (WULF)

TeraWulf is a US-based Bitcoin miner focused on clean crypto mining. The company powers its Bitcoin production with over 91% zero-carbon energy and aims to reach 100% in the future. In Q2 2023, TeraWulf reported a 67% increase in its hash rate capacity to 5.5 EH/s. The company mined 908 Bitcoin in the quarter, a 70% increase. WULF stock has gained 211.9% in 2023, closing at $2.09 on August 31.

Bitfarms Ltd. (BITF)

Bitfarms is a Canadian Bitcoin mining company with a vertically integrated operation, including onsite technical repair, electrical engineering, and proprietary data analytics. The company has 11 mining facilities in Quebec, Washington, Argentina, and Paraguay, powered by environmentally friendly hydropower. In Q2 2023, Bitfarms mined 1,223 BTC and grew its Bitcoin holdings to 549 BTC. BITF's stock closed at $1.36 on August 31, with a 209% increase in 2023.

Crypto stocks vs. cryptocurrency

Overview

Cryptocurrency and crypto stocks are dramatically different investment assets. While both are generally liquid assets that belong in the speculative side of your portfolio, they differ in several key ways. This article will outline the differences between these two types of securities and how they fit into your portfolio.

Stocks

Stocks represent fractional ownership in a publicly traded company. Each share of stock confers a percentage of ownership in the company itself, proportional to the number of shares issued. Stocks can make money through capital gains and dividends.

Pros

• Long history of solid returns: Stocks have a long track record of producing solid investment returns, with the S&P 500 stock index returning about 10% over the long term.
• Intrinsic value: Stocks have intrinsic value as they represent ownership in a company and its underlying assets and cash flow.
• Accessibility: It is now easier than ever to invest in stocks with many online brokers offering zero trading fees.
• Regulation: Stocks are heavily regulated by government bodies, providing certain investor protections.

Cons

• Volatility: Individual stocks can be volatile, though less so than cryptocurrencies.
• Lower potential for extreme gains: Broad stock indexes like the S&P 500 have less potential for extreme gains compared to cryptocurrencies.

Cryptocurrency

Cryptocurrency is a purely digital asset with no physical component. It exists as entries in an online ledger recording ownership. Cryptocurrencies can be pure currencies like Bitcoin or "utility tokens" like Ethereum, which function as part of a more complex software system.

Pros

• Possible hedge against fiat currency: Cryptocurrency is decentralized and not controlled by central banks or governments, making it a potential hedge against fiat currency inflation.
• Potential for outsized gains: Cryptocurrencies have the potential for large gains, with some coins seeing their prices skyrocket.
• Growing interest: There is a growing interest in cryptocurrencies from investors, companies, and governments.
• Wide variety: There are thousands of cryptocurrencies to choose from, with new coins introduced regularly.

Cons

• Extreme volatility: Cryptocurrencies are extremely volatile, with prices determined by the whims of traders.
• Cybersecurity risks: Despite touted security benefits, there have been notable hacks involving cryptocurrencies, and it is often difficult to recover stolen funds.
• No intrinsic value: Cryptocurrencies have no intrinsic value as they are not backed by underlying assets or earnings.
• Regulatory risks: Cryptocurrencies face regulatory uncertainty, with some countries banning them and others implementing new regulations.

Portfolio Management

When constructing your portfolio, you don't have to choose between cryptocurrency and stocks. It's about weighting your portfolio according to your risk tolerance and time horizon. Given the risks associated with cryptocurrency, a small allocation (around 5% or less) is recommended. Stocks, particularly a diversified collection of stocks, should make up the majority of your portfolio, especially for long-term investors.

Crypto exchanges

There are several well-known crypto exchanges, each with its own unique features and advantages. Here are some of the top crypto exchanges:

• Binance: Founded in 2017, Binance quickly rose to the top spot by trade volume, registering over USD 36 billion in trades by early 2021.
• Gemini: Launched in 2014 by the Winklevoss twins, Gemini has solidified its position with more than USD 175 million in trading volume. The Winklevoss brothers also introduced the Gemini Dollar token.
• Coinbase: Coinbase is the largest exchange by trading volume in the US and one of the most prominent names in the industry. Founded in 2012, it now has customers in over 190 countries and processes large trading volumes, reaching USD 2 billion by early 2021.
• Kraken: One of the oldest US crypto exchanges, founded in 2011. Kraken offers a solid range of coins and competitive trading fees. It is also one of the few US exchanges to offer margin trading and advanced trading tools.
• Crypto.com: Crypto.com provides access to over 250 cryptocurrencies and offers unique perks and rewards for its Crypto.com Visa Card users.
• KuCoin: KuCoin provides access to a wide range of altcoins at low fees. It is headquartered in Seychelles and has a growing user base in Asia, Europe, the Middle East, and Africa. However, it is not licensed in the US.
• EToro: A relative newcomer to the US market, eToro offers a crypto exchange and an online brokerage platform. It provides a communal experience and allows users to copy the trading strategies of advanced users.

When choosing a crypto exchange, it is important to consider factors such as fees, security, customer support, the availability of desired cryptocurrencies, and regulatory compliance. Additionally, some exchanges offer features like margin trading, crypto staking, and crypto loans. It is also worth noting that crypto exchanges have different requirements and restrictions for buying and selling crypto, and not all exchanges are available in all countries or states.

Crypto stocks with diversified business operations

Crypto stocks are publicly traded companies that operate businesses highly exposed to the cryptocurrency market or blockchain technology. They include popular crypto exchanges, cryptocurrency miners, blockchain technology specialists, and companies with large cryptocurrency holdings on their balance sheets.

CME Group (CME)

CME Group, formerly known as the Chicago Mercantile Exchange, operates one of the largest markets for trading futures and other derivatives. CME Group was one of the first international stock exchanges to offer Bitcoin futures trading in late 2017. It now also offers options on Bitcoin futures and Ether futures, providing a way for digital currency owners to mitigate risk from cryptocurrency price changes.

PayPal Holdings, Inc. (PYPL)

PayPal is a leading technology platform that facilitates digital and mobile payments for consumers and merchants. It operates its own digital wallets and allows users to buy, transfer, and sell various cryptocurrencies, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. PayPal's mobile wallet, Venmo, also enables users to buy and sell cryptocurrencies.

Block (SQ)

Block, formerly known as Square, is a financial services and payment processing company. It offers the Cash App, which allows users to buy, sell, send, and receive Bitcoin. Block also holds around $235 million in Bitcoin on its balance sheet as of 2024.

Interactive Brokers Group Inc (IBKR)

Interactive Brokers Group is an international brokerage firm that trades stocks, options, futures, and more. It offers customers the ability to trade cryptocurrency futures through its commodities futures trading desk. With a single-digit market cap, IBKR has significant growth potential due to its vast array of products.

SoFi Technologies Inc (SOFI)

SoFi Technologies is a financial services company that provides a secure platform for trading cryptocurrencies, private loans, mortgages, credit cards, banking, insurance, and more. With cryptocurrency making up a small portion of its business, SOFI offers diversification for investors while still providing exposure to the crypto market.

These companies provide a way to gain exposure to the cryptocurrency market while also having diversified business operations, potentially mitigating some of the risks associated with the volatile nature of crypto assets.

Crypto stocks as a proxy for direct Bitcoin investment

Crypto stocks are publicly traded companies that operate businesses that are highly exposed to the cryptocurrency market or blockchain technology. These stocks include crypto exchanges, crypto miners, blockchain technology specialists, and companies that hold crypto on their balance sheets.

Crypto stocks can be highly correlated to crypto price fluctuations, making them extremely volatile and unpredictable. However, they are a good option for investors who prefer the more tangible nature of stocks as an alternative to owning crypto directly.

MicroStrategy Inc. (MSTR)

MicroStrategy's core operations include providing business intelligence, mobile software, and cloud-based enterprise technology services. However, it has gained popularity due to its heavy reliance on digital assets to boost its corporate balance sheet. In 2020, then-CEO Michael Saylor announced his intention to stop holding cash and instead fund its corporate treasury with crypto, starting with a $250 million Bitcoin purchase. With Bitcoin's value increasing threefold since then, MicroStrategy's move has paid off. Investors seeking stocks as a proxy for direct Bitcoin investment can consider MSTR, which held approximately 140,000 Bitcoins as of the end of its fiscal first quarter.

Marathon Digital Holdings Inc. (MARA)

Marathon Digital is one of the largest bitcoin mining companies in the US. It provides transaction and custody verification services, as well as blockchain security work, to the crypto industry. The company operates around 150,000 miners across various locations, including Texas, North Dakota, and Abu Dhabi. Marathon Digital also emphasises its commitment to sustainability, investing heavily in renewable energy sources like wind power.

Block Inc. (SQ)

Block Inc., formerly known as Square, is a leading digital and mobile payment platform with a strong focus on blockchain technology and digital assets. The company's Cash App platform allows users to buy, sell, send, and receive Bitcoin. Block has invested a cumulative $220 million directly in Bitcoin, demonstrating its long-term potential.

Coinbase Global Inc. (COIN)

Coinbase is a well-known company that provides financial infrastructure and technology for the "crypto economy." It operates one of the largest cryptocurrency exchanges worldwide and engages with regulatory communities, including the Securities and Exchange Commission, to ensure legitimacy in the industry.

Riot Platforms Inc. (RIOT)

Riot Platforms is a Colorado-based cryptocurrency mining company that independently mines Bitcoin. It also provides co-location services and other critical infrastructure for institutional-scale Bitcoin mining companies. The company changed its name and business model in 2017 to capitalise on the crypto wave and is now valued at over $3 billion.

Frequently asked questions