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!
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.
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!
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
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.
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?
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!
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.
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!
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
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.
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?