Meet Wall Street's Most Unusual Bitcoin Stock: A Coal Producer Sporting an Eye-Popping 10% Yield

In the world of cryptocurrency investing, one name stands out as particularly unusual: Alliance Resource Partners (ARLP). This coal mining company, based in Oklahoma, has become a unique player in the Bitcoin mining scene, boasting an impressive 10% dividend yield and a significant Bitcoin reserve. Let's delve into the story behind this unlikely Bitcoin stock and explore the potential risks and rewards it offers.

Alliance Resource Partners, a master-limited partnership, is primarily known for its coal mining operations in the Appalachia region of the United States. However, in late 2020, the company found itself in an ideal position to become a cryptocurrency miner. Initially, it 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 progressed, Alliance Resource Partners began selling 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.

As of late December 2024, close to four dozen public companies owned at least 100 Bitcoin, indicating a growing interest in cryptocurrency as a strategic asset. Alliance Resource Partners' Bitcoin reserve, valued at around $47 million, places it among the top U.S.-based owners of the world's largest cryptocurrency (among public companies).



The company's foray into Bitcoin mining aligns with its core coal mining business in several ways, providing strategic benefits. First, Alliance Resource Partners utilizes the excess power load it has already paid for at its River View mine in Kentucky to fuel its Bitcoin mining efforts, generating additional revenue from an existing resource. Second, by venturing into Bitcoin mining, the company is diversifying its operations, reducing its reliance on a single commodity (coal) and mitigating the risks associated with fluctuations in coal prices and demand. Lastly, as the world transitions towards lower-carbon energy sources, Alliance Resource Partners' investment in Bitcoin mining positions it for the future, capitalizing on the growing demand for energy-intensive cryptocurrency mining operations.

However, Alliance Resource Partners' decision to mine Bitcoin also presents potential risks, given the volatility and energy-intensive nature of the cryptocurrency industry. The cryptocurrency market is known for its extreme volatility, which can lead to significant fluctuations in the value of Bitcoin. This volatility can result in both substantial gains and losses for Alliance Resource Partners. Additionally, the energy-intensive nature of Bitcoin mining can strain the grid and contribute to carbon emissions, potentially leading to criticism and regulatory challenges for the company.

Despite these potential risks, Alliance Resource Partners' 10% dividend yield is a testament to its ability to maintain a high payout even in the face of market fluctuations and changing energy dynamics. The company's ability to lock in long-term coal sales, diversify its operations, maintain efficient operations, and manage its financial strength has allowed it to sustain this high dividend payout.

In conclusion, Alliance Resource Partners' unusual foray into Bitcoin mining offers both potential rewards and risks. By leveraging its existing infrastructure and expertise in energy management, the company has positioned itself as a unique player in the cryptocurrency mining scene. However, the volatility and energy-intensive nature of the cryptocurrency industry present challenges that the company must navigate to maintain its success in this space. As the world continues to evolve, Alliance Resource Partners' strategic investments in both coal mining and Bitcoin mining may prove to be a winning combination for investors seeking exposure to both traditional and cutting-edge energy sectors.