Thanks, Plum. If they can execute and get the projected hash rate online, $42MM will probably be VERY conservative in my opinion. The huge decrease in global hash rate has allowed and will continue to allow efficient miners to generate more BTC than previously projected - global hash rate right now is ~138 EH/s compared to their projections in the table above, which could obviously not take into account the China hash rate exodus (or at least the timing and rate at which it would occur). Up until the recent difficulties adjustments, miners were at or near their most profitable levels ever (revenue per TH/s). As long as the BTC price can outpace the difficulty adjustments going forward, miners will remain at higher or constant profit levels and sentiment should remain positive. Global hash rate will continue to increase as miners get delivered, but that will take time and I believe BTC selling pressure will continue to subside as bitcoin is mined by efficient, profitable miners that are not forced to spot sell BTC to cover operational costs. As you mentioned, MKTY is in the minority by selling all of their BTC rewards, while most other publically traded miners are more focused on accumulating. I agree that this is a shorter-term play - I do not know how the market will react when people start talking about the 2024 halving, but I'm happy right now to own the miner that is extremely undervalued compared to its competitors. Cheers!
Completely agree. I wouldn’t be surprised to see a much higher RR earnings number but didn’t want to dwell too much on it… don’t want to come across as too promotional. I prefer to think in conservative ways. 👍
So ... I just had someone pitch me a series B or C (I forget) investment in US Bitcoin Mining ... a clean energy powered, yada yada, you get the drift ... for a cool 1bn pre money if I recall correctly, with current mining of 6BTC per day, so call that ~130m m in revenue for the year, which supposedly on an EV to hash rate basis is cheap ...
I have liked the miners as a way to have exposure to crypto but boy are they volatile. When I reflect more on whatever this "business" is and how it should be valued it leads me back to what is basically an arbitrage on low-cost power. If you can buy it cheap and "convert it" to crypto you're basically playing a spread game. There is lots of "conventional wisdom" that over time spreads like this get competed away but the hard part may be figuring out the timeframe, estimating the returns, and deciding what multiple to put on it.
Agree on the broad brush strokes. I think buying a basket of miners is a sure way to lose money over the long term. Having said that I really like MKTY for the reasons mentioned above
Hi Plum's owner. I would just like to leave some positive feedback here. I love your writing, strategy, and rational so far and we are lucky this is FREE, Dave. I found this through YAVB and am loving it so far! Even though HALL hasn't worked out in the short term, investing rarely goes in a straight line up. I'll be watching closely. Thanks again!
Thanks, really appreciate the support. Personally disappointed with HALL too, given how excited I was previously. I decided to give them the benefit of the doubt for one more quarter to see if they can show some good results
Yes the above poster has made a fool of himself with some hasty comments but he and I caught up offline and didn’t seem like there were nefarious intentions. I am at peace.
Plum, Been following your recent ideas and not exactly killing it. I know small caps are struggling, but some pretty bad misses on ELVT and HALL which were high conviction ideas. As for this idea I read Kingdom's report which I found very useful. Not sure what extra value your report provides, but that being said I think this one will work. Also it would be nice when you publish you show the price you paid for the stock. This one was in the 6s a week ago.Thanks and hoping for better results
Dave I’m not your advisor and you are getting all my ideas for free :) ELVT is actually up from when I posted my article, and HALL is down but not exactly a disaster (down ~12% from date posted). So you better get your facts right if you want to be critical my friend. If you bought at a higher price and lost more, that is completely on you.
Also my personal trading is none of anyone’s business. I always take a long term view and hold until my catalysts are realized. From time to time I may sell for other reasons like needing capital for a new idea, but I don’t feel the need to update people on every small trade I make.
Having said that if my thesis changes and I believe the best course of action is to sell, I may post updates if people might find such updates helpful.
Dave your response honestly makes you sound like a jerk. Plum does great work, not all ideas move up immediately, and he’s not charging anyone for this great resource. And another of his top picks JAKK has been doing great.
Plum, beginning in '22 I see ~$15-$16k BTC is basically breakeven, am I close? Are there costs that can shelved in the case of a BTC plummet i.e. capping a well only to turn it back on? Is there predictability to BTC mining or does mining become more difficult over time in this space i.e. more spend? I am like kindergarten level on crypto.
I think breakevens are much lower than that. Let me rerun the math. It depends on a lot of variables tho - network difficulty and what you are assuming for Hash rate given all the equipment upgrades they did / are doing given the China unplugging. I wish I could be more precise with the numbers, but it becomes garbage in garbage out pretty quickly
Thanks. I can’t get past the fact that a commoditised capital play should do 60% margins and 100s% of ROIC.
Out of interest, what are industry margins? And what does the cost curve look like (like for traditional mining)?
From what I can tell, their only advantage is cheap renewable energy. Why is it hard to get these off take agreements? How much cheaper is the price vs wholesale prices vs what peers have?
I think numbers are easily accessible for other public miners. MKTY should have leading margins (of US based comps) as power costs are among the lowest, and SG&A is pretty low also. Take a look at Kingdom capital’s deck for comparison of power costs among miners - he is a friend and has done very good work on this (and I didn’t want to recreate the wheel there). Their advantage is of course power, but I also like the fact that a PE executive is in charge - he is highly disciplined and does not gamble on BTC prices. Compare that to other miners which hoard BTC on the B/S… much more risky imo, unless you hedge BTC by shorting futures, etc
Thanks, Plum. If they can execute and get the projected hash rate online, $42MM will probably be VERY conservative in my opinion. The huge decrease in global hash rate has allowed and will continue to allow efficient miners to generate more BTC than previously projected - global hash rate right now is ~138 EH/s compared to their projections in the table above, which could obviously not take into account the China hash rate exodus (or at least the timing and rate at which it would occur). Up until the recent difficulties adjustments, miners were at or near their most profitable levels ever (revenue per TH/s). As long as the BTC price can outpace the difficulty adjustments going forward, miners will remain at higher or constant profit levels and sentiment should remain positive. Global hash rate will continue to increase as miners get delivered, but that will take time and I believe BTC selling pressure will continue to subside as bitcoin is mined by efficient, profitable miners that are not forced to spot sell BTC to cover operational costs. As you mentioned, MKTY is in the minority by selling all of their BTC rewards, while most other publically traded miners are more focused on accumulating. I agree that this is a shorter-term play - I do not know how the market will react when people start talking about the 2024 halving, but I'm happy right now to own the miner that is extremely undervalued compared to its competitors. Cheers!
Completely agree. I wouldn’t be surprised to see a much higher RR earnings number but didn’t want to dwell too much on it… don’t want to come across as too promotional. I prefer to think in conservative ways. 👍
So ... I just had someone pitch me a series B or C (I forget) investment in US Bitcoin Mining ... a clean energy powered, yada yada, you get the drift ... for a cool 1bn pre money if I recall correctly, with current mining of 6BTC per day, so call that ~130m m in revenue for the year, which supposedly on an EV to hash rate basis is cheap ...
I have liked the miners as a way to have exposure to crypto but boy are they volatile. When I reflect more on whatever this "business" is and how it should be valued it leads me back to what is basically an arbitrage on low-cost power. If you can buy it cheap and "convert it" to crypto you're basically playing a spread game. There is lots of "conventional wisdom" that over time spreads like this get competed away but the hard part may be figuring out the timeframe, estimating the returns, and deciding what multiple to put on it.
Agree on the broad brush strokes. I think buying a basket of miners is a sure way to lose money over the long term. Having said that I really like MKTY for the reasons mentioned above
Hi Plum's owner. I would just like to leave some positive feedback here. I love your writing, strategy, and rational so far and we are lucky this is FREE, Dave. I found this through YAVB and am loving it so far! Even though HALL hasn't worked out in the short term, investing rarely goes in a straight line up. I'll be watching closely. Thanks again!
Thanks, really appreciate the support. Personally disappointed with HALL too, given how excited I was previously. I decided to give them the benefit of the doubt for one more quarter to see if they can show some good results
Yes the above poster has made a fool of himself with some hasty comments but he and I caught up offline and didn’t seem like there were nefarious intentions. I am at peace.
Plum, Been following your recent ideas and not exactly killing it. I know small caps are struggling, but some pretty bad misses on ELVT and HALL which were high conviction ideas. As for this idea I read Kingdom's report which I found very useful. Not sure what extra value your report provides, but that being said I think this one will work. Also it would be nice when you publish you show the price you paid for the stock. This one was in the 6s a week ago.Thanks and hoping for better results
Dave I’m not your advisor and you are getting all my ideas for free :) ELVT is actually up from when I posted my article, and HALL is down but not exactly a disaster (down ~12% from date posted). So you better get your facts right if you want to be critical my friend. If you bought at a higher price and lost more, that is completely on you.
Also my personal trading is none of anyone’s business. I always take a long term view and hold until my catalysts are realized. From time to time I may sell for other reasons like needing capital for a new idea, but I don’t feel the need to update people on every small trade I make.
Having said that if my thesis changes and I believe the best course of action is to sell, I may post updates if people might find such updates helpful.
Dave your response honestly makes you sound like a jerk. Plum does great work, not all ideas move up immediately, and he’s not charging anyone for this great resource. And another of his top picks JAKK has been doing great.
Plum, beginning in '22 I see ~$15-$16k BTC is basically breakeven, am I close? Are there costs that can shelved in the case of a BTC plummet i.e. capping a well only to turn it back on? Is there predictability to BTC mining or does mining become more difficult over time in this space i.e. more spend? I am like kindergarten level on crypto.
I think breakevens are much lower than that. Let me rerun the math. It depends on a lot of variables tho - network difficulty and what you are assuming for Hash rate given all the equipment upgrades they did / are doing given the China unplugging. I wish I could be more precise with the numbers, but it becomes garbage in garbage out pretty quickly
Thanks. I can’t get past the fact that a commoditised capital play should do 60% margins and 100s% of ROIC.
Out of interest, what are industry margins? And what does the cost curve look like (like for traditional mining)?
From what I can tell, their only advantage is cheap renewable energy. Why is it hard to get these off take agreements? How much cheaper is the price vs wholesale prices vs what peers have?
I think numbers are easily accessible for other public miners. MKTY should have leading margins (of US based comps) as power costs are among the lowest, and SG&A is pretty low also. Take a look at Kingdom capital’s deck for comparison of power costs among miners - he is a friend and has done very good work on this (and I didn’t want to recreate the wheel there). Their advantage is of course power, but I also like the fact that a PE executive is in charge - he is highly disciplined and does not gamble on BTC prices. Compare that to other miners which hoard BTC on the B/S… much more risky imo, unless you hedge BTC by shorting futures, etc