What happened

The world's largest cryptocurrency by total value is Bitcoin (BTC -1.69%), and today that value is increasing even more. Earlier today the price per Bitcoin token briefly hit $48,000, and there were clear catalysts helping it get there. More and more, Bitcoin is becoming accepted by major companies, suggesting it is well on its way to mainstream adoption.

A handful of stocks rise and fall almost every day with Bitcoin. Here are a few making big gains today as of 3 p.m. EST:

  • Shares of MicroStrategy (MSTR -0.12%) were up only 2%, but they had been up as much as 17% earlier in the day.
  • Shares of Riot Blockchain (RIOT -5.10%) were up 21%.
  • Shares of Marathon Patent Group (MARA -4.03%) were up 11%.
  • Shares of Bit Digital (BTBT -4.30%) were up 9%. 
A businessman riding a rocket ship expelling cash exhaust flies over a multicolored bar chart.

Image source: Getty Images.

So what

For years, Bitcoin's following has been growing, but mostly among regular people -- not businesses. But MicroStrategy changed that when it spent more than $1.1 billion to buy Bitcoin tokens in late 2020. The billion-dollar move was surprising considering it's a publicly traded company and its software is completely unrelated to cryptocurrency. Of course, for now it means that MicroStrategy stock is almost as volatile as a cryptocurrency.

More recently, Tesla followed MicroStrategy's lead by using $1.5 billion to acquire some Bitcoin of its own. And Tesla's decision supports a long-held theory among Bitcoin enthusiasts. Barry Silbert, founder of Digital Currency Group (parent company of Grayscale Bitcoin Trust), said Bitcoin adoption would come in phases, with phase four being acceptance by Wall Street.

It's one thing when a smaller company like MicroStrategy tries something unconventional. But Tesla is a mega-cap stock and a member of the S&P 500. This suggests that perhaps Bitcoin adoption is entering Silbert's fourth phase after all. And there's more evidence for that today than ever.

A person holds a golden coin displaying the Bitcoin symbol.

Image source: Getty Images.

Just yesterday, Mastercard (MA -0.17%) announced that it will allow cryptocurrencies on its payments network before the end of 2021. According to the company, it's partnered with other companies in the past for certain crypto services. But management believes cryptocurrencies are only getting more important, motivating it to directly support certain cryptocurrencies (management didn't explicitly state which ones) in the future.

Furthermore, news broke today that Bank of New York Mellon (BK -0.50%) will also start supporting its clients' Bitcoin needs, according to The Wall Street Journal. Just stop and think about this for a moment. BNY Mellon is often called America's oldest bank, dating back to the 1700's. And it's a favorite of investing legend Warren Buffett -- a person who is not a fan of cryptocurrency. This bank -- of all banks -- is making concrete plans revolving around Bitcoin.

If these truly are the early signs of the so-called phase four of Bitcoin's adoption, then demand could keep growing for Bitcoin throughout 2021.

A silver coin displaying a Bitcoin symbol lies next to a pickax.

Image source: Getty Images.

Now what

Demand is growing, and that's why the price of Bitcoin has soared in recent months. And many investors believe a good way to play this trend is by buying Bitcoin-mining stocks like Marathon, Riot Blockchain, and Bit Digital. These companies are essentially paid in Bitcoin for providing computing power to the blockchain network. And investors believe revenue and profits will soar with the rising price of Bitcoin.

Moreover, investors are getting excited to see these companies amping up their computing power (known as their hashrate) because some assume this means the companies will be able to mine more tokens.

For example, today Riot Blockchain announced it's deploying new equipment over the next week that will take its hashrate to over one exa-hash per second (EH/s). That's quite a lot, and it's an increase of 26% from where it is right now. But investors shouldn't assume that means the company will mine 26% more Bitcoin. 

According to Blockchain.com, the total hashrate of the Bitcoin blockchain network is currently just over 165 million tera-hashes per second (TH/s), or simply 165 EH/s. However, on Jan. 1 of this year, it was just 143 EH/s. Therefore, the total hashrate of the network is up roughly 15% in that very short time. So Riot Blockchain is staying ahead of the overall rate of increase in the network, but just barely.

The Bitcoin payout is set, with miners getting their cut based on the amount of power they bring. What this data shows us is it's getting more competitive to mine Bitcoin. In the near term, that's good for companies like Canaan supplying mining equipment, and it's why Canaan stock soared yesterday. But for miners, it means they'll have to keep spending to stay competitive, which could strain profits.