For more than a century, no asset class has come remotely close to matching the average annual total return, including dividends, of stocks. But since Bitcoin (BTC +3.35%) entered the scene in the early 2010s, it's run circles around Wall Street's major stock indexes.
In May 2010, a single Bitcoin could be purchased for less than $0.01. But as of this writing in the late evening hours on Feb. 4, a single token will set an investor back by more than $97,500.
Image source: Getty Images.
A multitude of factors have caused investors to gravitate to Bitcoin, including (in no particular order):
- Its first-mover advantages within the cryptocurrency
- The perception of limited supply -- no more than 21 million Bitcoin will ever be mined.
- Halving events, which have occurred every four years and limit the amount of new Bitcoin released into circulation.
- The potential for the U.S. and/or other world governments to create a strategic Bitcoin reserve.
- A steady increase in U.S. money-printing, which has devalued the U.S. dollar over time and provided a case to own/HODL
But there's another variable that can now be added to this list: corporate adoption.
Bitcoin ownership among public companies is climbing
Over time, a growing number of publicly traded companies in the U.S. and abroad have added Bitcoin to their balance sheet. As of late December, close to four dozen owned at least 100 Bitcoin.
There are two prominent ways public companies get Bitcoin onto their balance sheet: buy it or mine it.
NASDAQ: MSTR
Key Data Points
The clear-as-day biggest buyer is self-proclaimed "Bitcoin Treasury Company" MicroStrategy (MSTR +11.88%), which has built up a 471,107-token position on its balance sheet, as of Jan. 27. For context, MicroStrategy is holding 2.24% of all Bitcoin that will ever be in existence, and its CEO Michael Saylor has sworn that none of these tokens will be sold. With at-the-market common stock issuances and preferred stock sales at Saylor's disposal, MicroStrategy is expected to continue buying Bitcoin.
The other popular way to build up a Bitcoin reserve is to mine the world's largest cryptocurrency by market value. This type of "mining" involves using high-powered computers to solve complex equations that validate and settle a group of transactions on Bitcoin's blockchain, known as a block. The reward for being the first to resolve a block is currently 3.125 Bitcoin, plus mining fees.
There are companies, such as Marathon Holdings (MARA +0.43%), Riot Platforms (RIOT +7.03%), and Hut 8 (HUT +5.61%), which spend big bucks to purchase the necessary infrastructure to earn Bitcoin block rewards. As of the end of January, Marathon held 45,659 Bitcoin, Riot held 18,221 Bitcoin, and Hut 8 held 10,208 Bitcoin in its reserve.
If there's one fairly common theme for the companies that hold Bitcoin on their balance sheet, it's that they have a technology focus. But there's one company among these top holders that definitely stands out.
Image source: Getty Images.
Say hello to Wall Street's most unique Bitcoin stock
If you were to ask 100 crypto enthusiasts to name the public companies with the most Bitcoin on their balance sheets, I'd wager not a one would mention Alliance Resource Partners (ARLP 2.23%).
Alliance Resource Partners is a master-limited partnership based out of Oklahoma that's best-known for its coal mining operations in the Appalachia region of the U.S. and its jaw-dropping 10% dividend yield. It's also a company that closed out 2024 with 482 Bitcoin on its balance sheet, which makes it one of the 15-largest U.S.-based owners of the world's largest cryptocurrency (among public companies). As of this writing, the company's Bitcoin assets are worth about $47 million.
Unlike MicroStrategy, Alliance Resource isn't a purchaser of this leading token. Rather, it found itself in an ideal position to become a cryptocurrency miner in the latter-half of 2020.
Initially, the company used the excess power load it had already paid for at its River View mine in Kentucky to fuel its Bitcoin mining efforts. As time has progressed, Alliance Resource Partners has sold a portion of the Bitcoin it mines to cover the crypto mining operating expenses of its subsidiary, Bitiki-KY LLC, and simply hangs onto the remainder.
NASDAQ: ARLP
Key Data Points
Dabbling with crypto mining isn't the only way Alliance Resource Partners is breaking the mold to diversify its operations. With coal usage declining in most developed markets, its management team has prioritized international exports as a means to bolster production and sales.
Additionally, the company tends to lock in volume and price commitments up to four years in advance, which comes in particularly handy when the per-ton sales price for coal is above the historic average. Locking in commitments well in advance is what allows the company to sustain a 10% dividend yield.
Furthermore, Alliance Resource Partners began developing its oil and natural gas mineral interests platform more than a decade ago. When the spot price of energy commodities rises, the company should net higher royalties on what's sold, resulting in more earnings before interest, taxes, depreciation, and amortization (EBITDA).
For the moment, Bitcoin mining remains an ancillary venture for Alliance Resource Partners and shouldn't be counted on as a significant growth driver. Nevertheless, if it can continue mining the world's largest cryptocurrency at a profit, there's the possibility of improving the financial flexibility of its balance sheet, which is, arguably, already at the top of the pack among coal producers.
