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Bitcoin Mining Stocks 101: Leading Bitcoin Miner Stocks

Date Modified: 10/06/2024

Bitcoin (BTCUSD) has been a prominent figure in financial markets, often hailed as the "king of crypto" since its inception in 2009.

While Bitcoin and cryptocurrencies were once viewed with scepticism due to their youth and nascent nature, today, an increasing number of traders and investors may be exploring ways to potentially capitalise on their price fluctuations especially since Bitcoin has frequently made headlines in recent years, marked by significant volatility.

Despite being embraced by some countries for trading, others remain cautious and even prohibit it. However, such restrictions should not discourage traders from considering involvement in this market.

One avenue for gaining exposure to cryptocurrencies without direct ownership involves trading Contracts for Difference (CFDs) on companies engaged in Bitcoin mining.

This is known as “Bitcoin Mining Stocks” or “Cryptocurrency Mining Stocks,” and it offers an alternative investment option to traditional cryptocurrencies.

Here's what you need to know:

A photo of a programmer preparing mining rig with GPU.

TL;DR

  • Bitcoin Mining stocks are the shares of the publicly traded companies involved in the mining of Bitcoin
  • Bitcoin mining refers to the process by which Bitcoin is produced and Bitcoin transactions are validated
  • Bitcoin mining is done by Bitcoin miners who solve complex mathematical problems to validate the transactions
  • Some of the most popular Bitcoin Mining companies include Cleanspark, Riot Platforms, Hut 8, and Bitfarms

Bitcoin Mining Explained

What Is Bitcoin Mining?

To understand Bitcoin Mining stocks, it's essential to grasp the concept of Bitcoin mining itself. Bitcoin, considered a scarce cryptocurrency, undergoes a process called mining for its creation. Mining involves solving complex cryptographic puzzles (mathematical problems), requiring technical expertise and powerful computers. This process consumes substantial energy.

Who Mines Bitcoin & How Is Bitcoin Mined?

Bitcoin mining is done by individuals who are called “miners” and who do the following:

The process of Bitcoin mining.

Why Is Bitcoin Mined?

Bitcoin mining serves two primary purposes: to introduce new Bitcoins into circulation and to validate and secure transactions on the Bitcoin network.

What Are Bitcoin Mining Stocks?

Bitcoin Mining stocks refer to the publicly-listed shares of the companies involved in the mining of Bitcoin or other cryptocurrencies. These companies, also referred to as Crypto Shares or Cryptocurrency Shares, can provide traders with exposure to the crypto market without having to trade or own the actual cryptocurrencies.

Bitcoin Miner companies may have large and elaborate data centres that allow the solving of complex Bitcoin math problems.

Leading Bitcoin Mining Share CFDs

There are multiple big names in the Bitcoin mining industry, but some of the biggest Bitcoin Miners' stocks are as follows:

Cleanspark (CLSK)

This company operates and owns data centres. As the name may suggest, Cleanspark operates on low-carbon power support Bitcoin.

  • Sector: Technology
  • Industry: Tech and Software
  • Founded: October, 1987
  • Headquarters: Henderson, Nevada, USA

Riot Platforms (RIOT)

This Bitcoin Miner company purchases blockchain and crypto companies and supports them.

  • Sector: Technology
  • Industry: Tech and Software
  • Founded: July, 2000
  • Headquarters: Castle Rock, Colorado, USA

Hut 8 (HUT)

This company provides the necessary infrastructure for blockchain technology and mainly provides services for North American customers.

  • Sector: Technology
  • Industry: Tech and Software
  • Founded: 2017
  • Headquarters: Miami, Florida, USA

Bitfarms (BITF)

This company serves as a blockchain tech and provides computing power to Crypto networks ranging from Bitcoin to Ethereum.

  • Sector: Technology
  • Industry: Tech and Software
  • Founded: 1981
  • Headquarters: Toronto, Ontario, Canada

Marathon Digital Holdings (MARA)

This company mines cryptos, generates them, and operates digital asset technology.

  • Sector: Technology
  • Industry: Tech and Software
  • Founded: February, 2010
  • Headquarters: Fort Lauderdale, Florida, USA

Bitcoin Halving 2024 and Its Effect on Bitcoin Mining Stocks

The Bitcoin Halving is an event that takes place once every four years and refers to the cutting of Bitcoin production in half.

Accordingly, this event can cause market volatility and impact the price of Bitcoin and Bitcoin Mining stocks.

The last Bitcoin Halving event took place on April 19, 2024, and marked Bitcoin’s fourth halving since its inception back in 2009.

Ahead of this Halving, Mining stocks experienced volatility as many of them plummeted. In addition, after this event, many of the leading Bitcoin Mining stocks kept experiencing losses. This is due to the fact that the Halving causes Bitcoin miners’ awards to be cut in half. In other words, Bitcoin miners (including Bitcoin mining companies) will keep doing the same work for less rewards, hence affecting these companies' revenues. However, only time will tell how these companies will perform in the future.

Trading Bitcoin Mining Share CFDs

While one can purchase the aforementioned stocks through traditional stock trading platforms (like Plus500 Invest*), one may also choose to trade Contracts for Difference (CFDs) instead. CFDs are derivative contracts between two parties, allowing them to trade on both rising and falling Bitcoin Mining stocks’ prices without having underlying ownership of the stocks.

This type of contract is leveraged, meaning that both gains and losses can be amplified.

To learn more about how CFDs work, you can watch our Trader’s Guide video titled “What Is CFD Trading.”

*Availability based on regulation.

Benefits and Risks of Trading Bitcoin Mining Share CFDs

Before delving into the world of Bitcoin Mining stocks, it may be worth keeping in mind the risks and rewards associated with it:

Pros

Bitcoin Mining share CFDs can present traders with the possibility of profile diversification and exposure to the potentially rewarding world of cryptocurrencies, without requiring that they invest or trade the actual cryptocurrencies.

While some may be bearish on the growth potential of cryptocurrencies, in general, and Bitcoin, in particular, many market experts believe that this field is poised to grow further in the future. This, in turn, may present itself as a possible advantage to those seeking more trading opportunities.

Cons

Despite its allure, there is no doubt that Bitcoin and cryptocurrencies are volatile assets that can lead to notable losses. In addition, while regulations are getting better, the regulation of cryptos is generally less developed compared to other types of market assets. Additionally, the mining of Bitcoin is an inherently risky business that demands lots of money, and operational and technological advancements, and can be accompanied by risks. This, in turn, can lead to companies experiencing losses if they are not equipped with the necessary tools to tackle such challenges.

In case you think this is the appropriate type of trading for your needs, you can trade Bitcoin Mining CFDs with Plus500.

Conclusion

In conclusion, the Bitcoin Mining field can present traders and investors with numerous trading opportunities. However, this can also be accompanied by many risks.

As such, equipping oneself with the necessary knowledge and risk management skills is crucial before delving into this fascinating, yet, complicated market sector.

FAQs

How can you trade Bitcoin Mining stocks?

You can trade Bitcoin Mining stocks with Bitcoin Mining stock Contracts for Difference (CFDs) with a provider like Plus500.

How did the 2024 Bitcoin Halving impact Bitcoin Mining stocks?

The Bitcoin Halving led to losses among leading Bitcoin Mining companies’ stocks.

Should you trade Bitcoin mining share CFDs?

Whether or not you should trade Bitcoin Mining share CFDs depends on your risk tolerance, goals, and overall ability to tackle the volatility of the cryptocurrency market.

What are the leading Bitcoin mining stocks?

As of May 2024, some of the most popular Bitcoin mining stocks include Cleanspark, Riot Platforms, Hut 8, and Bitfarms.

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Bitcoin FAQ

Bitcoin is a popular digital currency (also known as a cryptocurrency or Crypto) which was invented in 2009 by an unknown person or group of people using the pseudonym Satoshi Nakamoto. It is the original and most widely used cryptocurrency in circulation.

Unlike prevailing payment methods, which rely on centralised payment processing systems, Bitcoin is powered through a cryptographic peer-to-peer network that does not depend on middlemen such as banks or other financial institutions.

People who wish to invest in Bitcoin normally need to first setup a digital wallet, i.e. a smartphone or computer-based electronic device that allows users to buy the digital Bitcoins online. It is not possible to short sell digital Bitcoins.

However, Plus500 provides an alternative easier-to-implement solution in the form of an online app for trading CFDs on Bitcoin (through the BTC/USD pair).

Transactions on the Plus500 app can be carried out in both directions (Buy or Sell), and a high level of liquidity is ensured through the use of real-time price feeds from major Bitcoin exchanges.

Plus500's Bitcoin CFDs are available for trading around the clock and on weekends (except for one hour on Sundays).

Bitcoin and/or Cryptocurrencies, Forex and stocks are 3 different asset classes with different characteristics such as profit-risk, liquidity and volatility ratios. When trading these asset classes in the form of CFDs, the primary difference between them is a matter of leverage.

Plus500 offers leverage of up to 1:2 for trading Cryptocurrencies such as Bitcoin, meaning any potential profits or losses will be multiplied.

The leverage available for Forex CFDs is up to 1:30.

The leverage available for shares CFDs is 1:5.

To learn more about all the trading instruments available at Plus500, click here.

Please note that as a CFD trader you do not actually own the underlying asset – Bitcoin, Forex pair or stock – but you are rather trading on their anticipated price change, in the form of a Buy or Sell position.

We provide a number of trading tools that can be used as part of risk management strategies when trading in volatile markets such as Bitcoin and other cryptocurrencies.

You can use the ‘Close at Profit’ order to 'lock in' your potential profits - by automatically closing your trade at a predefined rate.

You can use the ‘Close at Loss’ order to minimise and prevent further losses - by automatically closing your trade at a predefined rate.

Another option is to use the ‘Trailing Stop’ order which is designed to protect profits by enabling a position to remain open as long as the price is moving in your favour, however it closes the trade as soon as the price changes direction by a predefined number of pips.

Note that these stop orders do not guarantee your position will close at the exact price level you have specified. If the price suddenly gaps or slips down or up, at a price beyond your stop level, your position may be closed at the next available price, which can be a different price than the one you have set. This is referred to as 'Slippage'.

If you wish to ensure that your trade closes at the exact rate you have set without the risk of slippage, you can place a ‘Guaranteed Stop’. This special order is available for an additional fee paid via the Bid/Ask spread.

To learn more about how you can use Plus500’s risk management tools, click here.

You can trade Bitcoin CFDs in the following steps:

  1. Log in to Plus500 or create an account.
  2. Search for Bitcoin under Categories > Crypto Currencies or type ‘Bitcoin’ or ‘BTC’ in the search bar.
  3. Check you are aware of Bitcoin’s properties (expiry, overnight fees etc) by clicking on (i).
  4. Enter your preferred trading amount.
  5. Consider placing stop orders: Close at Profit, Close at Loss, Guaranteed Stop and/or Trailing Stop.
  6. Open a Buy or Sell position based on your anticipation of Bitcoin’s price movement.
  7. Navigate to the Open Positions screen to follow your trade’s P&L (Profit & Loss). When you wish to close out your trade, simply click on the ‘Close’ button.

Read more about Cryptocurrency CFDs and Bitcoin in our "How to Buy, Sell and Trade Cryptocurrencies" and "How Bitcoin works" articles.

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