The recent growth in Bitcoin (BTC) mining investments by large companies suggests that this activity is still seen as being potentially a solid business idea. What does it involve and can a Bitcoin mining business expect to turn a healthy profit?
What Is Bitcoin Mining and How to Get Started?
BTC is a type of digital currency where new coins are mined online by solving complex algorithms, which require a large amount of computing energy. This means that a specialised type of computer rig is needed to carry out the operation.
A setup known as an ASIC (Application-Specific Integrated Circuit) miner is generally used, meaning that a hefty initial investment is required.
Individual miners can still work alone, generally by joining a mining pool, although the market is increasingly dominated by huge companies that have the resources to create large, cost-effective mining operations around the planet.
Some countries are also entering the mining market, with Bhutan and El Salvador among the most notable examples. Bolivia recently announced that it would be using the excess energy from natural gas wells to mine BTC.
The Possible Benefits of a Mining Business
At the end of 2024, close to 20 million Bitcoins had already been mined, which is over 94% of the total supply. Given that only 21 million can be mined, you might wonder whether this represents a profitable long-term business venture.
To clear up this subject, we need to consider the original white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System which was published in 2008 using the pseudonym of Satoshi Nakamoto.
This document outlines how BTC uses cryptographic proof instead of trust and takes into account the need for mining to become more difficult over time, increasing the value of the tokens.
To make this a deflationary currency, Nakamoto introduced the concept of “halving”, which means the mining process becomes progressively more difficult. Mining companies rely on this process continuing to work well and drive up the BTC price over time.
Traditionally regarded as a highly volatile market, the introduction of large companies and the possible emergence of national and state Bitcoin reserve funds could change this in the future.
Growing adoption of BTC and other cryptocurrencies is another factor that could affect prices in the future. Figures from Blackrock show how crypto adoption has grown 43% faster than mobile phones and 20% quicker than the internet.
The emergence of ETFs and rumours of celebrity investors, like the debunked Gordon Ramsay rumour, have helped push these coins into the mainstream while more retailers are accepting BTC now.
Microsoft and Starbucks are a couple of the big brands that accept crypto payments with Ferrari and Paris department store Printemps joining them in 2024.
We can see how cryptocurrencies have entered areas of the online entertainment business like the music streaming service Tune.FM and the Slots.LV casino. The latter allows players to fund their accounts using various tokens to play Bitcoin slots.
While BTC is the most recognisable crypto on the list, they also accept alternatives like Tether, Litecoin and Ethereum. Players choose the payment method that suits them and enter the deposit stage.
At this point, they need to transfer tokens from their own wallet to the casino’s wallet address. When the time comes to make a casino withdrawal, the process is reversed, with the winnings being sent to the player’s wallet this time.
This method of banking has proved to be highly effective in the online gambling industry, where speed, low costs and security are the areas that players pay the most attention to when choosing how to move funds.
Which Companies Are Making the News Headlines?
Marathon Digital Holdings (MARA) is the biggest Bitcoin mining company by market capitalisation. They have 16 data centres across four continents and convert clean, stranded, and underutilised types of energy to mine BTC.
Listed on the NASDAQ and with a market cap of $US 5.4 billion, MARA announced a convertible note launch to secure $850 million of interest-free funding last year.
Riot Platforms, Inc. is listed on the NASDAQ under the RIOT ticker. They recently announced that they’ve been investigating the use of artificial intelligence and high-performance computing.
According to this report from Yahoo Finance, the potential benefits of using these technologies in crypto mining have helped make analysts like Patrick Moley at Piper Sandler bullish over the prospect of mining company shares.
Mining company HIVE (NASDAQ: HIVE) reported Q4 revenue for 2024 at $29.2 million, with increased Bitcoin holdings of 2,805 BTC worth $260 million.
The company confirmed plans to increase its hash-rate from 6 EH/s to 25 EH/s later in 2025 with a planned expansion in Paraguay. This increase in computational power should allow them to mine more effectively and, in theory, earn more profits.
Bitcoin mining has increasingly moved into the hands of major companies in recent times but growing adoption rates and the prospect of price increases mean that there are still opportunities to enter this market.
