Bitcoin Investment: Top Companies To Consider

Bitcoin and other cryptocurrencies are gaining mainstream adoption, with the crypto sector reaching a peak market value of $3 trillion in fall 2021. While crypto is a risky and volatile investment, there are several companies that offer crypto market exposure without having to buy crypto directly. These companies are involved in crypto mining, blockchain technology, and crypto exchanges. Here are some of the best bitcoin companies to invest in:

- Coinbase Global (COIN)

- Block (SQ)

- PayPal Holdings, Inc. (PYPL)

- Marathon Digital Holdings Inc. (MARA)

- MicroStrategy Inc. (MSTR)

- CME Group Inc. (CME)

- iShares Bitcoin Trust (IBIT)

- Riot Blockchain Inc. (RIOT)

- Nvidia Corporation (NVDA)

- Advanced Micro Devices Inc. (AMD)

Bitcoin mining companies

Marathon Digital Holdings (MARA)

Marathon Digital is a leading Bitcoin mining company with operations in various locations, including Texas, North Dakota, and Abu Dhabi. The company operates around 150,000 miners and is committed to using renewable energy sources, making it one of the most sustainable miners in the world. In the first quarter of 2023, Marathon mined 2,195 BTC coins and held a total of 11,466 Bitcoins. The company aims to become one of the largest and most energy-efficient Bitcoin mining operations globally.

Riot Platforms (RIOT)

Riot Platforms is a Colorado-based Bitcoin mining company that provides co-location services and critical infrastructure for institutional-scale Bitcoin mining operations. The company has a strong focus on expanding its operations and has recently launched a new mining facility, increasing its mining hash rate and infrastructure capacity. As a direct cryptocurrency company, Riot is a riskier investment option.

Hive Digital Technologies (HIVE)

Hive Digital Technologies is a cryptocurrency mining company with operations in Canada, Sweden, and Iceland. The company offers a range of services, including cloud computing and data centre operations. Hive has delivered tremendous performance, with a market value of around $500 million and year-to-date returns of 288.9%.

Hut 8 Mining (HUT)

Hut 8 Mining is a Canada-based Bitcoin mining company that commands a sizable minority stake in the overall Bitcoin network. The company generates strong cash flows relative to its revenue and maximises returns by lending out the Bitcoin it mines instead of selling it on the market. Hut 8 Mining is committed to environmental sustainability and uses a mix of wind, solar, and natural gas energy sources.

Canaan (CAN)

Canaan is a company that designs high-powered, application-specific integrated circuit (ASIC) machines for Bitcoin mining. Their next-generation Avalon ASICs can make tens of trillions of guesses per second, making them extremely powerful for mining Bitcoin. Canaan's devices are known for their affordability and low energy consumption, leading to greater profits for miners.

Crypto ETFs

While crypto ETFs provide more liquidity and a somewhat regulated infrastructure, the underlying investment remains extremely speculative and volatile. The flagship cryptocurrency, Bitcoin, has traded below $10,000, soared above $60,000, dropped back under $20,000, and then again topped $60,000—and that's just in the past five years.

For investors who believe that cryptocurrency or blockchain technology is worth investing in, there are other crypto-related ETF strategies to consider, including:

• Crypto equity ETFs: These primarily hold stocks of companies directly engaged in the crypto business, including cryptocurrency banks, exchanges, and miners.
• Blockchain equity ETFs: These primarily hold stocks of firms involved with blockchain technology and may include large multinationals like Amazon, Microsoft, and Walmart.
• Bitcoin and/or ether futures ETFs: These offer a more regulated way to speculate on bitcoin's or ether's price moves. Bitcoin and ether are currently the only cryptocurrencies with available futures. Note that the leverage created by futures contracts can amplify both the gains and losses of an already volatile investment, and these ETFs must also pay to roll from one futures contract to the next, which can further erode profits or add to losses.

Despite the risks, crypto ETFs can be a way for investors to gain exposure to the crypto market and the potential for high returns. However, it is essential to carefully consider the risks and volatility of the crypto market before investing.

Crypto exchanges

When choosing a crypto exchange, it's important to consider factors such as security, fees, the range of cryptocurrencies offered, and the exchange's reputation. Here are some of the best crypto exchanges in various categories:

Best Overall Crypto Exchanges:

• Binance: One of the largest and most popular crypto exchanges, offering a wide range of cryptocurrencies and derivatives trading.
• Coinbase: A user-friendly exchange with a large number of supported assets, strong security measures, and advanced trading options.
• Crypto.com: Provides a vast ecosystem, including its own blockchain, a native token, a crypto visa card, and yield-generating products.
• Gemini: Emphasizes security and compliance, insures user funds, and is SOC 2-certified.

Best Crypto Exchanges for Beginners:

• Coinbase: Offers an easy-to-use platform, a large number of supported cryptocurrencies, and robust security features.
• Gemini: Provides an intuitive interface, a wealth of educational resources, and strong security measures.

Best Crypto Exchanges for Experienced Traders:

• Kraken: Offers advanced trading features, a wide range of cryptocurrencies, and competitive fees.
• Binance: Provides a comprehensive platform with numerous trading options and a high volume of trades.

Best Crypto Exchanges for Low Fees:

• Kraken: Charges competitive trading fees and provides volume discounts for high-volume traders.
• Binance: Known for its low fees, with maker and taker fees starting at 0.1% and 0.5%, respectively.

Best Crypto Exchanges for Altcoins:

• BitMart: Supports over 1,500 cryptocurrencies, including many small and mid-cap tokens.
• KuCoin: Provides access to a wide range of altcoins at low fees.

Best Crypto Exchanges for Bitcoin:

• Cash App: Allows users to seamlessly buy, sell, and store Bitcoin, with support for the Bitcoin Lightning Network.
• Coinbase: Offers an easy-to-use platform and supports Bitcoin trading, along with other popular cryptocurrencies.

Best Decentralized Crypto Exchanges:

• Bisq: A decentralized, peer-to-peer exchange that allows users to buy and sell Bitcoin and other cryptocurrencies privately and securely.
• Uniswap: A popular decentralized exchange that utilizes an automated market maker system, allowing users to trade a wide range of Ethereum-based tokens.

Blockchain technology specialists

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

Another company with significant exposure to blockchain technology is 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 users can also check out and pay using crypto at millions of online merchants. PayPal's mobile wallet, Venmo, also allows users to buy and sell cryptocurrencies.

While both Block and PayPal have a strong association with blockchain technology and crypto, it is important to remember that crypto stocks are highly volatile and unpredictable due to their correlation with cryptocurrency price fluctuations. Therefore, they may not be suitable for all investors.

Crypto stocks vs crypto

When it comes to investing in Bitcoin, there are two main options: investing in crypto stocks or investing directly in crypto. Both options have their own advantages and disadvantages, and it's important to understand the differences before making any investment decisions.

Crypto Stocks:

Investing in crypto stocks means buying shares of companies that are involved in the cryptocurrency industry. These companies can include crypto exchanges, mining companies, blockchain technology providers, or companies that hold cryptocurrency on their balance sheets. Crypto stocks offer investors a way to gain exposure to the cryptocurrency market without the extreme volatility associated with direct crypto investments.

One of the key advantages of investing in crypto stocks is that these companies often have diversified business models and revenue streams, which can help mitigate the risk associated with the volatile crypto market. For example, companies like Block Inc. (SQ) and PayPal Holdings, Inc. (PYPL) offer digital payment platforms that facilitate crypto transactions but also have other sources of revenue.

Another advantage of crypto stocks is that they are typically traded on regulated stock exchanges, such as the Nasdaq or NYSE, which provides a level of protection for investors. These exchanges have strict requirements for financial reporting and disclosure, which can help investors make more informed decisions.

However, it's important to note that crypto stocks can still be quite volatile, especially compared to more traditional stocks. The performance of crypto stocks is often closely tied to the performance of the underlying cryptocurrency market. As a result, crypto stocks may not be suitable for investors with a low-risk tolerance or a short-time horizon.

Direct Crypto Investments:

Investing directly in cryptocurrencies, such as Bitcoin or Ethereum, means purchasing the digital currencies themselves through an exchange or broker. This option offers the potential for higher returns but also comes with significantly higher risk.

One of the main advantages of direct crypto investments is the potential for outsized gains. Cryptocurrencies have seen tremendous price appreciation since their introduction, and some investors have made significant profits by buying and holding these assets.

Additionally, cryptocurrencies are decentralized and not controlled by central banks or governments. This lack of central control can be appealing to investors who are concerned about the impact of monetary policy on traditional fiat currencies.

However, the extreme volatility of cryptocurrencies is a major disadvantage. Crypto prices can fluctuate wildly due to speculation and changes in market sentiment, and it's not uncommon for crypto assets to lose or gain value very rapidly. As a result, direct crypto investments may not be suitable for risk-averse investors or those with a short-time horizon.

In summary, the decision between investing in crypto stocks or directly in crypto depends on an individual's risk tolerance, investment goals, and time horizon. Crypto stocks offer a more diversified and regulated investment option, while direct crypto investments provide the potential for higher returns but come with significantly higher risk. It's important to carefully consider your financial situation and goals before making any investment decisions.

Frequently asked questions