Cryptocurrencies are digital currencies that are independent of traditional banking systems. They exist on a blockchain, a secure and immutable transaction record shared among many computer nodes in a network.
The most well-known cryptocurrency is Bitcoin, and the process of generating new Bitcoin units is called mining. When Bitcoin was new, it was easy enough for tech-savvy individuals to mine their own tokens using store-bought hardware. However, as Bitcoin has grown in popularity, mining has become a difficult and expensive process.
That’s why these days most mining is done at the industrial level. Large corporations with capital and the right equipment at their disposal can mine tens or even hundreds of Bitcoins every day. Buying shares of companies that mine crypto is a way for investors to reap the potential benefits this industry has to offer without risking major losses.
1. SATO Technologies (TSXV:SATO)
Year-to-date gain: 341.67 percent; market cap: C$27.37 million; current share price: C$0.53
SATO Technologies specializes in crypto mining powered by sustainable energy. The company has built a network of high-efficiency data centers capable of achieving a Bitcoin-mining capacity of nearly 0.6 exahashes per second (EH/s).
SATO’s Q3 results reveal total revenue of C$4.07 million for the period, a 46 percent increase year-on-year. The firm also reported EBITDA of C$2.11 million, up from Q3 2022’s negative C$4.57 million EBITDA. CEO Romain Nouzareth remarked that achieving positive EBITDA is “a testament to the efficiency and effectiveness of our mining operations.”
2. Digihost Technology (TSXV:DGHI)
Year-to-date gain: 296.23 percent; market cap: C$58.28 million; current share price: C$2.10
Digihost Technology is a blockchain technology company based in the US. It focuses on Bitcoin mining, but has plans to diversify and expand its mining operations to include other cryptocurrencies as well. Its operations are maintained with its own crypto accounting and tax software, Balance, and its data centers power 11,800 miners.
On February 8, the company made waves when it completed the acquisition of a 60 megawatt natural gas power plant in North Tonawanda, New York. The move was controversial, as environmental groups had fiercely objected to the sale, filing a lawsuit against Digihost in January of this year. As the plant previously only operated for a small portion of the year, plaintiffs represented by Earthjustice claimed that Digihost’s plan to run it without pause would increase the plant’s greenhouse gas emissions by as much as 3,500 percent. The environmental impact of the crypto industry as a whole has been a point of contention between eco-friendly groups and crypto miners as the data centers needed for mining run 24/7.
The company’s third quarter results, released on November 14, show a revenue increase of 46 percent year-on-year thanks to the rising price of Bitcoin over the last half of 2023.
3. Bitfarms (TSX:BITF)
Year-to-date gain: 253.45 percent; market cap: C$437.13 million; current share price: C$2.05
Bitfarms mines Bitcoin using state-of-the-art data centers powered in part by hydroelectricity and locally sourced natural gas. In the third quarter, its facilities produced an average of 13 Bitcoins per day.
On November 27, Bitfarms announced plans to purchase at least 35,888 T21 miners, thereby increasing its capacity to mine Bitcoin from 6.3 EH/s to 12 EH/s. The agreement includes an option for Bitfarms to purchase an additional 28,000 miners, which would bring its total hash rate to 17 EH/s by H2 2024. The company expects that the full upgrade will be complete by December 2024, around the time of the hotly anticipated Bitcoin halving event. T21 miners, a product made by leading Bitcoin hardware supplier Bitmain Technologies, are efficient and use less power than other miners on the market, in line with Bitfarms’ commitment to ESG best practices.
4. DMG Blockchain Solutions (TSXV:DMGI)
Year-to-date gain: 185.19 percent; market cap: C$63.76 million; current share price: C$0.39
DMGI Blockchain Solutions is a vertically integrated blockchain and crypto company that helps users monetize the blockchain environment by delivering digital solutions like its Blockseer software platform, which allows traders to monitor and track their transactions on the Bitcoin and Ethereum networks.
Its business model consists of two segments, Core and Core+. Core focuses on crypto infrastructure operations, deriving its revenue from rewards and transaction fees, hosting services and hardware sales to industrial crypto miners. Core+ deals with data analysis and forensic services.
5. Cathedra Bitcoin (TSXV:CBIT)
Year-to-date gain: 150 percent; market cap: C$14.44 million; current share price: C$0.10
Cathedra Bitcoin is a Canadian Bitcoin company with five mining operations in the US. In October, Cathedra launched CathedraOS, a firmware product built to work with Bitmain X19. The company made the software publicly available for users to download for free, but charges a 3 percent fee in the form of hash rate as compensation.
Cathedra’s Q3 financial results show a revenue increase of C$1.3 million and a Bitcoin production rise of 6.31 units compared to Q3 2022. The company attributes the increase to an expansion in its hash rate, which was achieved by increasing its efficiency level through underclocking, relocating some of its machines and deploying its Rover mobile data center at its partner 360 Mining’s off-grid location in Texas. 360 Mining will provide continuous energy to Cathedra’s Bitcoin-mining operations through its natural gas operations.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.