The crypto market is on fire this winter, with many cryptocurrencies seeing sharp rises as we start 2024 off strong. One of the biggest potential catalysts has been the SEC’s approval of 12 Bitcoin (BTC-USD) ETFs, finally giving the nod to these long-awaited investment vehicles. With the flood gates now opened, I expect to see many more Bitcoin ETFs launch this year, further propelling the leading cryptocurrency higher. In addition, Bitcoin’s next halving event is approaching in 2024, reducing the new supply of coins on the market. Historically, these halvings lead to a supply shock that drives the Bitcoin price higher. And cyclical assets like Bitcoin could get an additional boost with rate cuts potentially on the horizon in the first half of 2024.
While I always recommend holding some Bitcoin directly, buying shares of crypto stocks related to Bitcoin is another way to capitalize on this momentum and potentially see even bigger gains. These crypto mining stocks tend to trade more speculatively and have greater volatility than Bitcoin, as evidenced by the recent tumble. But their returns during crypto bull runs can be incredible for those with a higher risk tolerance. Let’s take a look!
Riot Platforms (RIOT)
Riot Platforms (NASDAQ:RIOT) has very low production costs and a significant stash of BTC to benefit from future price spikes. If the crypto winter thaws more, RIOT stock has the potential to deliver much higher gains than Bitcoin itself. One of the reasons for this is that the company mines Bitcoin at a cost of only $5,537 per coin, which is the lowest among publicly-traded miners. Therefore, if the price of Bitcoin increases next year, Riot’s profit surge will be magnified due to the company’s operating leverage.
Riot currently holds over 7,327 Bitcoin in its balance sheet, which makes it highly-sensitive to the token’s value. The upcoming 2024 “halving” event, which reduces mining rewards to create scarcity, could potentially trigger a surge in Bitcoin’s price. As far as pure-plays in crypto mining are concerned, Riot Platforms is my top choice for navigating market ups and downs. This Bitcoin miner has increased its production capacity and is well-positioned to benefit from future bull runs. In December, its monthly Bitcoin output rose by 12% to 619 coins.
Riot Platforms aims to increase its hash rate even more. It has secured two major orders with MicroBT, one in June for over 33,000 next-gen miners and another for an additional 66,560 miners this month. The company is targeting over 100 EH/s in total.
Apart from benefiting from rising Bitcoin prices, Riot can also capture more mining market share. Despite Bitcoin sitting 29% below its record highs, Riot’s cost to produce a single Bitcoin is approximately $5,500. With Bitcoin currently trading near $46,000, this miner’s margins seem sustainable even if prices correct. However, if bullish momentum takes hold, Riot’s profit potential could be massive.
Marathon Digital (MARA)
Marathon Digital (NASDAQ:MARA) is another company that mines cryptocurrencies and is well-positioned to benefit from Bitcoin’s long-term growth. Although Marathon’s cost to produce each Bitcoin is higher than that of Riot, its recent growth cannot be ignored. In Q3 of 2023, Marathon mined 3,490 Bitcoins, a 467% year-over-year increase compared to the 616 coins mined the previous year, resulting in a net income of $64 million from Bitcoin revenue. The company then produced 1,853 BTC in December alone.
Despite the company’s higher mining costs, Marathon remains profitable, especially at Bitcoin’s current price level. Notably, this profitability is expected to continue in 2024. Additionally, with Marathon expanding its network hash rate, it is well-positioned to benefit from the growth of crypto mining overall.
With Bitcoin surging recently amid several near-term catalysts, I’ve become increasingly bullish on Bitfarms (NASDAQ:BITF). However This stock could take a breather soon as it has appreciated a lot.
Still, I think the Canadian Bitcoin miner is not a bad buy below $3 per share. Bitfarms earned 446 BTC in December 2023 and 4,928 BTC for all of 2023. The company’s hashrate also grew by 44% year-over-year, which exceeded guidance.
Going forward, the company hopes to achieve achieve 12 EH/s and 25 w/TH fleet efficiency in Q2 2024. Jeff Lucas, CFO of Bitfarms, said,
“In 2024, we are building on our financial foundation with a continued focus on effectively utilizing cash flow from operations in our capital efficient growth plan for farm expansion and fleet-wide upgrades. Throughout 2023, we maintained a strong balance sheet during the fourth quarter, and we increased total liquidity by $52 million to $118 million, ending the year with $84 million in cash, $34 million in BTC in treasury, and only $4 million in debt. Furthermore, in December, we increased our overall BTC exposure by expanding our Synthetic HODL™ portfolio by a total of 100 long-dated calls while maintaining BTC held in treasury relatively constant at 804.”
Hive Blockchain (HIVE)
Hive Blockchain (NASDAQ:HIVE) announced impressive 2023 calendar year production totals from its global Bitcoin mining operations. The company mined 3,260 Bitcoin in 2023 while doubling its hashrate from 2 EH/s to 4 EH/s.
This hashrate expansion allowed Hive to maintain approximately 1% share of the total Bitcoin network, mining around 9 coins daily on average throughout the year. With Bitcoin’s daily block rewards averaging 900 and totaling 328,500 for 2023, Hive’s output equated to a market share right around 1%.
As more efficient mining machines compete for limited daily rewards, Bitcoin’s mining difficulty increased about 100% in 2023. But Hive expanded its hashrate enough to preserve its share. The company ended 2023 with around $17 million in cash and 1,704 Bitcoin held.
Hive aims to hold its full balance until April 2024’s halving cuts daily rewards in half to 450 Bitcoin. If the price remains elevated by then, I believe Hive can easily remain profitable.
The company also made major progress deploying new mining hardware. Its full order of 9,800 Bitmain S19k Pro miners shipped, with 70% installed before January 2024. Once fully deployed, Hive forecasts a hash rate of 4.8 EH/s at 28.7 J/TH efficiency.
After pulling back recently, I think CleanSpark (NASDAQ:CLSK) stock retains significant upside potential. Last quarter, CleanSpark grew revenue by 100% year-over-year due to its expanding hash rate. The company posted $144 million in cash, also marking substantial growth. The company’s production of more than 720 Bitcoin last month also took its total holdings above 3,000 BTC.
The company recently announced a major agreement to purchase up to 160,000 Bitmain S21 miners, positioning the company for up to 50 EH/s in hashing capacity.
Under the terms, CleanSpark will initially receive 60,000 S21 units shipping from April to June 2024. The deal also includes a strategic call option to acquire 100,000 additional S21 miners at a fixed $16 per terahash through the end of 2024.
If fully exercised, this option would boost CleanSpark’s hashrate 400% from its current 10 EH/s to approximately 50 EH/s once all new machines are deployed. As one of North America’s largest publicly traded Bitcoin miners, this move positions CleanSpark well to capture significant growth during the next crypto bull cycle.
Iris Energy (IREN)
Iris Energy (NASDAQ:IREN) recently published its December operational update, highlighting impressive Bitcoin mining production numbers. With 4,123 Bitcoin mined in 2023, the company averaged a 5,576 PH/s hashrate in December while mining 399 Bitcoin in that month alone.
December revenue reached $17.2 million, weighed down by electricity costs of $5.9 million. Importantly, Iris expanded self-mining capacity to 10 EH/s after acquiring 1.6 EH/s of new Bitmain T21 miners for $14/TH.
This 80 MW expansion at the company’s Childress, Texas facility will be delivered progressively from January 2024 onward. The added T21 units will also improve Iris’ overall fleet efficiency from 29.5 to 24.8 J/TH once installed.
The company’s 10 EH/s growth was fully funded through Iris’ targeted equity financing program. The company continues early works and procurement for the next 100 MW expansion at Childress, where an additional 500 MW is immediately available.
At the company’s Canal Flats, Mackenzie, and Prince George sites in Canada, Iris continued mining at capacity, leveraging 100% renewable energy. Construction also progressed at Childress, with new data center buildings on track for deployment from Q1 2024.
With its December Bitcoin production, Iris mined a total of 4,123 coins in 2023. The company begins 2024 well-positioned for further growth, with plans to scale beyond 10 EH/s in the second half of the year. If crypto market conditions improve as hoped, Iris could substantially boost future output at lower costs.
Bit Digital (BTBT)
As a more under-the-radar crypto mining pick, Bit Digital (NASDAQ:BTBT) could surge from current levels near $3 a share if a bull market rally continues this year.
The company touts 99% carbon-free mining. It also runs over 44,000 miners, producing a 3.4 exahash rate at maximum capacity. To date, Bit Digital has earned 5,503 Bitcoins since its inception.
Bit Digital’s profitability is closely tied to the price of Bitcoin. However, if Bitcoin experiences a significant surge in value, some experts believe that previously-struggling companies in the industry, such as Bit Digital, could make a comeback by 2025.
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On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.