Bitcoin mining is the process of creating new bitcoins by solving complex mathematical problems using specialized hardware and software. Bitcoin miners are rewarded with newly minted bitcoins and transaction fees for their efforts. Bitcoin mining is essential for securing the Bitcoin network and validating transactions.

However, Bitcoin mining is also a highly competitive and risky business. Bitcoin miners have to deal with fluctuating prices, rising costs, regulatory uncertainties, environmental concerns, and cyberattacks. Moreover, Bitcoin mining is becoming more difficult and less profitable as more miners join the network and the supply of new bitcoins decreases.

The underperformance of listed digital asset companies means that there could be compelling investment opportunities in the bitcoin (BTC) mining space, crypto services provider Matrixport said in a report on Thursday.

If bitcoin were to climb to a new all-time high of $70,000 an investor would realize a return of only 167%, the report said. Investors could see larger gains by buying a diversified portfolio of publicly listed bitcoin mining companies including firms, such as HIVE Digital (HIVE), Bitfarms (BITF) and Iris Energy (IREN). Based on bitcoin’s current price, these stocks are trading at a 33% discount, and offer 52% upside, the note said.

Benefits of listed bitcoin miners:

Liquidity: Listed bitcoin miners are easy to buy and sell on the stock market, unlike mining equipment or cloud mining contracts, which may have limited availability or high fees. You can also diversify your portfolio by investing in different listed bitcoin miners or use options and futures to hedge your risk.

Transparency: Listed bitcoin miners are subject to financial reporting and auditing standards, which means you can access reliable information about their operations, revenues, costs, and profitability. You can also track their hash rate, which is the measure of their mining power and competitiveness in the network.

Leverage: Listed bitcoin miners can benefit from the rising price of bitcoin, as their revenues increase while their costs remain relatively stable. This means they can generate higher returns than simply holding bitcoin. However, this also works in reverse, as a falling price of bitcoin can hurt their profitability and share price.

Innovation: Listed bitcoin miners can access capital markets to raise funds for expanding their mining capacity, upgrading their equipment, or acquiring other mining companies. They can also leverage their expertise and reputation to enter new markets or offer new services related to bitcoin mining.

Challenges of listed bitcoin miners:

Volatility: Listed bitcoin miners are subject to high price fluctuations, as they are influenced by both the stock market and the bitcoin market. Their share price can also diverge from the underlying value of their mining assets, depending on the market sentiment and expectations.

Competition: Listed bitcoin miners face intense competition from other miners, both listed and unlisted, who may have lower costs, higher efficiency, or more favorable locations. They also have to deal with the increasing difficulty of mining, which requires more computing power and energy consumption to maintain the same hash rate.

Regulation: Listed bitcoin miners are exposed to regulatory risks, as different jurisdictions may have different rules and taxes for bitcoin mining. Some countries may ban or restrict bitcoin mining altogether, forcing the miners to relocate or shut down their operations. Regulatory uncertainty can also affect the demand and supply of bitcoin, as well as its price.

Environmental impact: Listed bitcoin miners have a significant environmental impact, as they consume large amounts of electricity and generate carbon emissions. This may attract criticism from environmental activists, investors, and regulators, who may demand more sustainable and green practices from the miners. Some listed bitcoin miners are trying to address this issue by using renewable energy sources or offsetting their carbon footprint.

Listed bitcoin miners are an attractive option for investors who want to gain exposure to bitcoin mining without having to deal with the technical and operational challenges of running a mining facility. However, they also come with high risks and uncertainties, as they depend on the volatile and competitive nature of the bitcoin market. Therefore, investors should do their due diligence and research before investing in listed bitcoin miners.

This is why some Bitcoin miners have decided to go public and list their shares on stock exchanges. By doing so, they can access more capital, diversify their income streams, increase their transparency, and attract more investors. Some of the most prominent listed Bitcoin miners are Marathon Digital Holdings (MARA), Riot Blockchain (RIOT), Bitfarms (BITF), Hut 8 Mining (HUT), and Argo Blockchain (ARBKF).

These listed Bitcoin miners could be the ultimate bet for 2024 for several reasons. First, they have a strong competitive advantage over other miners due to their large-scale operations, efficient equipment, low-cost electricity, and strategic partnerships. Second, they have a high exposure to the price of Bitcoin, which is expected to rise significantly in the next few years due to increasing demand, limited supply, institutional adoption, and innovation. Third, they have a potential to generate additional revenue from other sources, such as hosting services, mining pools, lending platforms, and green energy projects.

Therefore, investing in listed Bitcoin miners could be a smart way to gain exposure to the booming Bitcoin market and benefit from its long-term growth potential. However, investors should also be aware of the risks involved in this sector, such as volatility, regulation, competition, and security. As always, do your own research before making any investment decisions.