Best Bitcoin Stocks: Where To Invest Your Money

Bitcoin and other cryptocurrencies have become a hot investment, gaining mainstream adoption and creating immense wealth for early investors. While the crypto market is volatile and subject to sharp swings, it has produced jaw-dropping returns for some. For those looking to invest in Bitcoin, there are several publicly traded companies that offer exposure to its price. These include pure-play Bitcoin mining companies, such as Marathon Digital Holdings, as well as companies that hold Bitcoin on their balance sheets, like Block and MicroStrategy. Other companies, such as PayPal Holdings and Coinbase Global, facilitate the buying and selling of Bitcoin and other cryptocurrencies on their platforms. For investors looking to gain exposure to Bitcoin without directly purchasing the cryptocurrency, these stocks offer an alternative investment opportunity.

Bitcoin mining companies

Riot Platforms Inc. (RIOT)

Riot Platforms is a U.S.-based Bitcoin mining company with a strong focus on expanding its hash rate and infrastructure capacity. Its mining operations are located in central Texas, and its Rockdale facility has a capacity of 700 megawatts (MW), making it the largest Bitcoin mining and hosting facility in North America. In the second quarter of 2023, Riot reported a record hash rate capacity of 10.7 exahashes per second (EH/s) and mined 1,775 BTC. RIOT shares have surged by 234.8% in 2023.

Marathon Digital Holdings Inc. (MARA)

Marathon Digital is a U.S. Bitcoin mining company that operates its own mining pool and invests in mining infrastructure and technology. The company aims to improve mining efficiency by integrating its own technology. In the second quarter of 2023, Marathon reported a 314% year-over-year increase in Bitcoin production and an "energized" hash rate of 17.7 EH/s. Marathon Digital Holdings also made it to the list of the best-performing stocks of the Valkyrie Bitcoin Miners ETF (WGMI).

Cipher Mining Inc. (CIFR)

Cipher Mining is a technology company focused on developing and operating Bitcoin mining data centers in the U.S. In the second quarter of 2023, Cipher reported a record self-mining hash rate capacity of 6.8 EH/s, with plans to increase it to 7.2 EH/s in the third quarter. The company also has aggressive expansion plans and a strong balance sheet, positioning it for robust cash flows.

Bitfarms Ltd. (BITF)

Bitfarms is a Canadian Bitcoin mining company with a diversified production operation, including 11 mining facilities across North and South America. The company focuses on vertical integration, offering onsite technical repair, proprietary data analytics, and company-owned electrical engineering and installation services. In the second quarter of 2023, Bitfarms mined 1,223 BTC and increased its capacity to 5.3 EH/s. The company is also expanding its Bitcoin mining capacity and expects to boost its hash rate to 17EH/s, with the potential to reach 21EH/s.

CleanSpark, Inc. (CLSK)

CleanSpark is a U.S.-based Bitcoin mining company that focuses on using renewable energy sources and is committed to environmental sustainability. The company is expanding into new jurisdictions, including Texas and Georgia, to leverage abundant renewable energy resources. In October 2023, CleanSpark announced the deployment of 4.4 EH/s of additional computing power by adding Antminer S21 models to its fleet. CleanSpark was also one of the best-performing stocks of the Valkyrie Bitcoin Miners ETF (WGMI).

Hut 8 Mining Corp. (HUT)

Hut 8 Mining is a Canadian digital asset mining company with two mining facilities in southern Alberta, utilizing emission-free energy sources. The company has a geo-diverse data center and cloud computing capacity, and it is expanding its operations into new jurisdictions, including the U.S. and Germany. In 2023, Hut 8 completed a merger that increased its total power under management to 825 megawatts. The company is well-positioned to benefit from the upcoming Bitcoin halving event.

TeraWulf Inc. (WULF)

TeraWulf is a U.S. Bitcoin mining company focused on clean crypto mining. The company aims to power its Bitcoin production with 100% zero-carbon energy and is investing in renewable energy projects. In the second quarter of 2023, TeraWulf reported a 67% increase in its hash rate capacity to 5.5 EH/s, and it mined 908 Bitcoin. The company is expanding its Lake Mariner facility in New York by adding 18,500 mining machines.

Crypto stocks vs crypto

When considering whether to invest in crypto stocks or crypto, it is important to understand the fundamental differences between the two.

Cryptocurrencies and crypto stocks share certain characteristics, but they are distinct investment assets. Crypto stocks are publicly traded companies that are highly exposed to the cryptocurrency market or its underlying blockchain technology. These include crypto exchanges, crypto miners, blockchain technology specialists, and companies with large crypto holdings. Crypto stocks allow investors to gain exposure to the crypto market without directly purchasing cryptocurrencies. On the other hand, cryptocurrencies are digital or virtual currencies that use cryptography for security. They are decentralised and not tied to the financial performance of a company, unlike stocks.

Crypto Stocks: The Pros

• Regulation and oversight: Crypto stocks are traded on regulated stock exchanges, providing a level of protection for investors that is currently lacking in the crypto space.
• Established market presence: Crypto stocks represent ownership in established companies with tangible assets and revenues, as opposed to purely speculative crypto investments.
• Dividends: Many stocks pay dividends, offering a steady stream of income in addition to potential capital gains.
• Diversification: Crypto stocks often have diversified business models, offering a range of financial services beyond crypto.
• Lower volatility: While stocks can be volatile, they generally exhibit less extreme price swings compared to cryptocurrencies.

Crypto: The Pros

• Potential for high returns: Crypto has the allure of high returns due to its volatility and newness.
• Constant market access: Crypto markets are accessible 24/7, allowing trading at any time without traditional market restrictions.
• Innovation and diversification: Investing in crypto provides exposure to the latest technological innovations and a means to diversify an investment portfolio.
• Decentralisation and privacy: Crypto is based on the concept of decentralisation, allowing peer-to-peer exchange of value without intermediaries. The anonymity of crypto transactions also appeals to many users.

Key Considerations

When deciding whether to invest in crypto stocks or crypto, it is essential to consider your investment goals, risk tolerance, and knowledge of the specific asset class. Additionally, the regulatory environment, potential returns, and your personal interest in the technology or company should be factored in. Remember that both crypto stocks and crypto are volatile and unpredictable, and there are risks involved with any investment. It is always recommended to consult with a qualified financial professional before making any investment decisions.

Crypto exchanges

Centralized Cryptocurrency Exchanges (CEX)

CEXes act as intermediaries between buyers and sellers, making money through commissions and transaction fees. Examples include Binance, Coinbase Exchange, Kraken, and KuCoin. They offer a familiar, user-friendly way for beginner investors to trade cryptocurrencies. CEXes also offer an extra layer of security and reliability for transactions. Additionally, they allow investors to leverage their investments using margin trading. However, they often charge high transaction fees and are attractive targets for hackers due to the large amounts of cryptocurrency they hold.

Decentralized Cryptocurrency Exchanges (DEX)

DEXes, such as Uniswap, PancakeSwap, dYdX, and Kyber, allow peer-to-peer transactions directly from users' digital wallets without going through an intermediary. They rely on smart contracts, providing more privacy and lower transaction costs than CEXes. However, DEXes are intended for sophisticated investors as they require users to manage their own crypto wallets and passwords. DEXes also struggle with liquidity due to lower trading volumes compared to CEXes.

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 with large cryptocurrency holdings on their balance sheets.

Crypto stocks can be highly correlated with cryptocurrency price fluctuations, making them extremely volatile and unpredictable. However, they can be a good alternative for investors who prefer the more tangible nature of stocks as opposed to investing directly in cryptocurrencies like Bitcoin.

• Block Inc. (SQ): Block Inc. is a leading digital and mobile payment platform, with its core business being Square. The company has invested heavily in blockchain technology and digital assets, including the development of Cash App, a platform where users can buy, sell, send, and receive Bitcoin.
• Coinbase Global Inc. (COIN): Coinbase operates one of the largest cryptocurrency exchanges in the world and provides financial infrastructure and technology for the "crypto economy." It engages with regulatory communities, giving it legitimacy in a relatively new and unregulated industry.
• Marathon Digital Holdings Inc. (MARA): Marathon is one of the largest Bitcoin mining companies in the US. It also provides general services to the crypto industry, including transaction and custody verification, as well as blockchain security work. The company has a strong focus on sustainability, investing heavily in renewable energy.
• MicroStrategy Inc. (MSTR): MicroStrategy relies heavily on digital assets to boost its corporate balance sheet. In 2020, the company announced its intention to stop holding cash and instead fund its corporate treasury with crypto, starting with a $250 million Bitcoin purchase.
• Nvidia Corp. (NVDA): Nvidia is a semiconductor manufacturer that produces graphics processing units (GPUs) used in cryptocurrency mining and other data-intensive tasks. It is an indirect play on the crypto frenzy but has had amazing performance in recent years.
• Riot Platforms Inc. (RIOT): Riot Platforms is a Colorado-based cryptocurrency mining company that independently mines Bitcoin and provides critical infrastructure for related operations.

These companies provide investors with exposure to the cryptocurrency market and blockchain technology while offering a more diversified and potentially less risky investment option compared to direct investment in Bitcoin.

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 Inc (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 is one of the few regulated futures trading organisations in the US, giving it a competitive advantage in the industry.

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. PayPal's mobile wallet, Venmo, also enables users to invest in crypto.

Block Inc (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.

SoFi Technologies Inc (SOFI)

SoFi Technologies is a financial services company offering a range of products, including a secure platform for trading cryptocurrencies. It provides private loans, mortgages, credit cards, banking, insurance, and more. With crypto making up a small portion of its business, SoFi offers diversification for investors.

Marathon Digital Holdings Inc (MARA)

Marathon Digital is a significant player in Bitcoin mining and one of the largest pure-play Bitcoin mining stocks. It also provides general services to the crypto industry, including transaction and custody verification, and blockchain security. Marathon Digital is committed to using renewable energy sources and invests in wind power.

These crypto stocks offer exposure to the cryptocurrency market while also having diversified business operations. They provide investors with the potential for growth in the crypto space while mitigating the risks associated with the volatility of the crypto market.

Frequently asked questions