Bitcoin mining uses about 150 Terawatt-hours (TWh) of electricity in a year. That’s more than the electricity consumed by the entire province of Ontario in 2021 (133.8 TWh), with over 14 million people.
This consumption and its impact on the environment has been one of the main arguments against cryptocurrencies, but it’s much more complex.
Mining stocks remain one of the best ways to gain crypto exposure without holding crypto assets. And if it’s the kind of investment exposure you are looking for, then the best crypto mining stocks in Canada below are worth considering.
What Do You Need To Know About Crypto Mining Stocks?
Crypto mining stocks can be considered a misleading name as most publicly-traded crypto miners focus on one crypto–Bitcoin.
It’s the most valuable and the hardest to mine crypto, which requires a lot of energy and is the main cost driver. Crypto mining is the process of creating new cryptocurrency tokens by solving complex mathematical problems.
When looking into crypto mining stocks, a few things to consider are:
- Green energy usage: Most of Canada’s best crypto mining stocks focus on 100% renewable-based mining operations. This improves the ESG profile of the company and provides a layer of protection against future sanctions aimed at crypto mining operations.
- Cost of mining one Bitcoin: The lower the cost from other crypto miners, the better its chances of turning a profit.
- Hash rate: This is the computing power associated with crypto mining. Simply put, the higher the hash rate, the more crypto a company can mine in a given period.
But the most important thing you need to look at is the underlying crypto the miner focuses on (usually Bitcoin). When the crypto value is high, it’s profitable to mine, hold, or sell.
If the value is going down and the gap between it and the cost of mining each crypto unit is shrinking, mining might not be profitable.
So the underlying crypto is usually the main factor influencing a crypto mining stock.
This sometimes results in contrarian performance against traditional tech assets. An example would be May 2021-July 2021, when three of Canada’s largest crypto mining stocks fell even though the tech sector gained 22%.
Pros and Cons of Crypto Mining Stocks
- Incredible growth potential.
- Offer exposure to cryptocurrencies easily
- Can be held in registered accounts (unlike actual crypto).
- Highly volatile.
- Performance mimics the crypto they mine.
- The pool of crypto mining stocks is concentrated on Bitcoin.
Crypto Mining Infrastructure in Canada
Canada has always been a hotspot for mining activities, thanks to its vast natural resources. The crypto mining industry in the country has tapped into this potential by making use of Canada’s abundant and cheap renewable energy, especially hydroelectric power.
Regions like Quebec and Alberta have emerged as significant hubs for crypto-mining operations.
Alberta, known for its rich oil reserves, is diversifying its energy profile and promoting itself as a haven for crypto miners. Mining operations in these provinces are primarily powered by green energy sources, reducing the environmental impact associated with crypto mining.
The cold Canadian climate provides a natural cooling system for the mining rigs, reducing the operational costs of cooling the machines during intense mining operations. This gives Canada a distinct advantage over other countries where the climate might not be as forgiving, and cooling costs can eat into profitability.
Mining facilities in Canada also benefit from the robust tech infrastructure and connectivity the nation has to offer. The presence of multiple mining facilities, like those of Hut 8 and Bitfarms, indicates a robust ecosystem for crypto mining in the nation.
Best Crypto Mining Stocks In Canada for 2023
Some of the best crypto mining stocks that trade on the Canadian stock markets are:
- Galaxy Digital Holdings Stock (GLXY.TO)
- Hut 8 Mining Stock (HUT.TO)
- HIVE Blockchain Technologies Stock (HIVE.V)
- Bitfarms Stock (BITF.TO)
- DMG Blockchain Solutions Stock (DMGI.V)
- SATO Technologies Stock (SATO.V)
1. Galaxy Digital Holdings Stock
Galaxy Digital has a diverse range of crypto-related businesses, one of which is crypto mining.
The Galaxy Digital Mining division has two operational wings. One is prop mining, in which the company aims to achieve 80/20 renewable/conventional power mix and low-cost mining.
The second is miner financing, which ties into its other crypto services. Crypto mining makes up a relatively small portion of the total income, and the company gives you more comprehensive exposure to the crypto market than a typical mining stock.
Still, the stock’s performance has tracked the performance of Bitcoin quite faithfully, though the stock soared much higher than the underlying crypto for each peak.
The stock grew by over 3,600% in the three years between Dec 2018 and Nov 2021. This is double the growth Bitcoin achieved during this period.
2. Hut 8 Mining Stock
Hut 8 Mining is a pure crypto mining stock focusing on two cryptocurrencies – Bitcoin and Ethereum. But the company has expanded its operational focus to include data centers offering computing power to its Web 3.0 customers.
This has a much broader scope of growth than the crypto mining operations and, in time, may prove a more stable investment.
Hut 8 mining has three dedicated mining facilities, two in Alberta and one in Ontario. Most of its mining power comes from renewable energy, but it’s not 100% green crypto mining. Up until May 2022, the company had over 7,000 self-mined coins.
So far, the stock has followed the pattern of Bitcoin’s rise and fall with modest accuracy, with its falls being smoother than Bitcoin’s.
Its growth between Dec 2018 and Nov 2021 was about 1,300%, which is lower than Bitcoin’s 1,800% growth over the same period.
3. HIVE Blockchain Technologies Stock
HIVE Blockchain became the first publicly traded crypto-miner in the world in 2017. It mines both Bitcoin and Ethereum and uses only green energy to mine its coins.
It has six mining facilities in three countries – Canada, Iceland, and Sweden. This geographic diversification offers relatively more safety in case Canada starts sanctioning crypto mining.
It’s not only one of the most potent crypto miners but also the most efficient ones, thanks to its top-of-the-line mining rigs.
One of its best growth phases was between Jan 2020 and Feb 2021, when the stock grew well over 6,000%. That’s over 9x more than the growth of Bitcoin over the same period, and this growth magnification is worth considering.
4. Bitfarms Stock
Bitfarms only mines Bitcoin and has nine mining operations, seven of which are in Canada and one each in the US and Paraguay. It also uses renewable power (hydro mostly) for its mining operations and has 100% ownership of the mining infrastructure.
This is different from some other miners that rely upon co-location services or rented rigs for crypto mining. Bitfarms is also quite transparent about the cost of mining each Bitcoin, so it’s easy to assess its profitability.
The company is working on rapidly expanding its computing power, and one operation that’s expected to come online by the end of 2022 will more than double the computing power it had at the beginning of the year.
The stock offered exceptional returns between Oct 2020 and Nov 2021 – over 3,400%. Comparatively, Bitcoin rose about 475% in that time.
5. DMG Blockchain Solutions Stock
DMG Blockchain also offers investors a more comprehensive exposure to crypto technology, and Bitcoin mining is one of its four operations.
It owns one of Canada’s most extensive crypto mining facilities and is working towards a new cooling technology that may significantly improve its mining efficiency. It also offers co-location services to third-party miners.
Since its inception, the stock has truly only spiked once in the last five years and rose over 7,500% between March 2020 and Feb 2021, much higher than Bitcoin did during that same time period.
6. SATO Technologies Stock
SATO markets itself as a responsible crypto miner, though its 100% hydro-powered mining farm in Quebec is not unique in this regard. It employs AI data processing to make the process of mining more efficient.
It’s expected to expand its mining capacity between 5x and 25x by 2025. Where other crypto miners focus on naturally low temperatures of the regions they operate in, SATO relies upon its unique ventilation system to keep the temperatures down (and consequently, push the operational efficiency up).
SATO stock’s performance only vaguely resembles the underlying asset’s (Bitcoin’s) performance.
The highlight of the last five years has been its 4,000% growth between Jan 2020 and Sep 2021, during which Bitcoin grew about 490%.
Best Crypto Mining Stocks In the US
If you are looking for US-listed crypto mining stocks, consider starting with the following three.
- Marathon Digital Holdings Stock (MARA)
- Riot Blockchain Stock (RIOT)
- Core Scientific Stock (CORZ)
1. Marathon Digital Holdings Stock
Marathon is a Nevada-based miner with a single mining facility located in Montana, though it’s one of the largest in North America (yet) in terms of power consumption and mining output.
The company aims to control the cost of mining by obtaining electricity at the cheapest possible rates. The company which provides power to the mining facility, Beowulf, has a stake in Marathon. This relationship benefits the miner.
Marathon is an old company and stock, but its mining operations are relatively recent, but now they are the primary stock price influencer.
When Bitcoin spiked in Apr and Nov 2021, the stock followed. And its growth between Apr 2020 and Nov 2021 was extreme – over 17,000%.
2. Riot Blockchain Stock
RIOT Blockchain is one of the most powerful Bitcoin miners in the world. It has the largest mining facility (by power consumption) in North America, and it’s already working on a new facility capable of surpassing the existing one.
By Aug 2022, it had deployed over 40,300 miners and used some of the best and latest crypto miners in the market, which allows it to get the best out of its electricity consumption – more hash rate with less power consumed.
RIOT’s best growth phase in the last five years is different from Marathon, one of its direct competitors. It grew by over 10,000% between March 2020 and Feb 2021.
3. Core Scientific Stock
Core Scientific can be considered a true crypto miner as it’s the only one on this list that mines cryptocurrencies other than Bitcoin or Ethereum. Its mining portfolio consists of seven cryptocurrencies.
It also has a more complex mix of hardware compared to most other miners on this list.
Crypto mining is just one of its operations. The company also focuses on blockchain technology. It also offers hosting services to third-party miners.
Core Scientific only started trading on the NASDAQ exchange in Apr 2021, and its performance has not been in line with Bitcoin’s growth.
Between Apr and Nov 2021, when Bitcoin moved from peak to peak, offering virtually no gains, Core Scientific stock returned almost 44%.
Should You Invest In Crypto Mining Stocks?
Crypto mining stocks might be a great fit for you if you:
- Want exposure to crypto market without holding cryptocurrencies directly.
- Have the necessary risk tolerance for crypto assets and their volatility.
- Wish to take advantage of powerful growth potential of cryptocurrencies with the added tax advantage of TFSA or RRSP.
- Are satisfied with primary exposure to Bitcoin, and not a wide array of cryptocurrencies.
- Are looking for market-beating and sometimes contrarian returns.
What Happens When All The Crypto Is Mined?
Bitcoin is the core focus of most crypto miners, and it has a limited supply – 21 million. The last coin is expected to be mined in 2140, which gives investors plenty of time.
When the crypto is mined, these mining companies will make money from the transaction fees buyers/sellers pay whenever cryptocurrency changes hands. It may be a profitable business, but it’s too soon to tell.
A more compelling issue right now is how difficult it’s becoming for even the most powerful crypto miners to mine each Bitcoin, and this difficulty will only increase in time.
It may be possible that a company that mines thousands of crypto tokens each year may see the numbers shrink to hundreds. And if the price of the crypto tokens is not enough to justify the cost of mining, the miner will be in deficit.
Q: What Are The Best Crypto Mining Stocks To Buy?
A: HIVE Blockchain and Bitfarms are two of the best crypto mining stocks you can buy in Canada. Marathon Digital Holding and Riot Blockchain are two of the best US-based crypto mining stocks to buy.
Q: Is Cryptocurrency Mining Legal In Canada?
How To Buy Crypto Mining In Canada
The cheapest way to buy stocks is from discount brokers. My top choices in Canada are:
- 105 commission-free ETFs to buy and sell
- Excellent customer service
- Top-notch market research tools
- Easy-to-use and stable platform
- Stock and ETF buys and sells have $0 trading fees
- Desktop and mobile trading
- Reputable fintech company
- Fractional shares available
To learn more, check out my full breakdown of the best trading platforms in Canada here.
Crypto miners are a great way to invest in crypto assets, especially Bitcoin, while not holding the actual asset.
This allows you to take advantage of the tax benefits of the registered accounts and has so far resulted in magnified gains compared to the underlying asset.
But it’s also important to understand the risk associated with this particular asset class.
If you are looking for a different type of crypto exposure, these top crypto ETFs in Canada might be a better fit.