Bitcoin vs. BTC companies: what is the best buy?

Bitcoin (BTC) has treated its followers well in 2023, having appreciated over 80% since the start of the year. However, there may be better ways for investors to capitalize on the success of the asset besides stacking the actual sats.

Here’s a look at how some Bitcoin-related assets and companies are performing alongside BTC, from financial companies to mining stocks.

Mining stocks are booming

Shares of several publicly traded Bitcoin miners surged on Friday, including CleanSpark (CLSK; 11.32%), Riot Platforms (RIOT; 14.33%) and Hut 8 (HUT; 6.14%). Bitcoin, on the other hand, was up just 1.42%.

This year alone, the three miners have seen their stock prices at least triple in value. Rival mining company Iris Energy, which rose 9.5% on Friday, is up 48% since January 1.

Miners’ balance sheets and earnings are directly tied to the price of Bitcoin, as these companies receive a fixed number of Bitcoin every ten minutes in the form of newly minted coins from the network.

Many of these miners have made significant infrastructure investments this year in preparation for the “halving” – an event that halves Bitcoin network emissions and is widely seen as catalyzing Bitcoin bull markets.

While the industry’s upside looks promising, it may also encounter even greater downside volatility than BTC. Core Scientific (CORZQ), for example, saw its share price plummet more than 80% in a single day in October after revealing it was unable to service its debt.

Exchanges and ETFs

Coinbase (COIN) is another publicly traded company to overtake Bitcoin this year, up 134% year-to-date. Although the U.S. Securities and Exchange Commission (SEC) sued the exchange last month, Bitcoin’s positive price action, upbeat first-quarter earnings numbers from Coinbase, and a partnership with BlackRock for a Bitcoin ETF provided are all synonymous with good fortune for the company.

BlackRock’s filing makes markets more optimistic that a cash ETF could finally overtake the SEC, paving the way for other companies to follow suit.

This makes Grayscale Bitcoin Trust (GBTC) another attractive buy: the fund’s shares have been trading at a discount well below the value of its underlying Bitcoin for years. However, if its efforts to convert to a spot ETF prove successful, this discount will immediately be restored to parity, creating added value for investors. The discount currently stands at 27%.

Until a Bitcoin spot ETF is approved, MicroStrategy (MSTR) is one of the best alternatives available, up 162% year-to-date. The software company — whose balance sheet includes over 150,000 BTC — frequently issues shares to buy more Bitcoin, much like an ETF.