The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Thanks, good to know they've got new management in - but the 30 J/T needs to change. They have good power costs at 4.4, but not exceptional. I think it could be a wise move to sell some sites and use the funds to upgrade their fleet - depending on what price per MW they could get.
Keep in mind that with 15 J/T you get twice the hash in the same amount of infrastructure so you could end up with near the same hash but with lower input costs. Or just do the usual bitcoin miner method of diluting shareholders to oblivion.
I calculate these remaining 22.2 EH of machines would be 16.6 to 17 J/T to achieve the average 21 J/T for the full 50 EH.
They'd also have an option to backfill some of their existing older machines with newer machines which might be a good option also. The 30 J/T machines need to go, unless they have exceptional power deals.
I think they may have timed this news release very well. Might move some shares around later on.
I'm not sure about them. Why did they go bankrupt in the first place? Their presentation is giving a guide of around 30 J/T fleet with 4.4 cent kwh costs, but on another slide they gave a cash cost of 15k to mine, but my calculations yesterday show that with these figures you're looking around 50k post halving direct costs at current network hash so I don't think they are generating much cash.
Share count will go from 177mil to 402 mil on conversion of Notes/Warrants which is 2.27x the current count so you have to take this into account for mcap. It would extinguish debt and give them some cash, however they need to upgrade their fleet which will be expensive.
However the fact that they went bankrupt means I'm reluctant to touch them so think I'll leave it.
https://s29.q4cdn.com/356375974/files/doc_financials/2023/q4/FINAL-CORZ-FY2023-Earnings-Presentation-031124.pdf
Yeah, even if we assume they were making 10k a coin in cash (which is likely not the case), then if they mine 50 coins, they are generating 500k cash a month, but the interest payments we know are more than that, and that doesn't account for the wages of the 30 staff. Actually it might be less than 30 as that was the average for the year....
My experience was my questions never got answered. To the layman it sounds like they've answered all the questions, but there's clearly an element of pick and choose.
Hosting agreement we never got any detail on, but it does expire at year end.
They've confirmed electricity of just under 5 cents per kwh. (I'm not clear if this is inclusive of curtailment benefit or not). They also confirmed that they are underclocking, so the J/T might be a little less than the 30 J/T, but would also reduce hashrate if they are doing this.
60ish cost per coin for electricity/hosting is expensive - and does not include interest payments/corporate bloat/etc.
They should get into memecoins - Petecoin anyone?
They have some energy credits which will help them, but they are done for by year end barring some miracle.
Hash won't drop, S21's are coming through, and in many cases you can fit twice the hash into the same slot as the previous old gen miner.
The constant expansion of the last year has been a drag for us miner investors, but it's pretty clear now why it had to happen, and also why many are moving to AI for revenue support.
Q1's coming next month and should look good on the surface with pre-halving revenue and FASB profits.
Just checked the last 10Q - 4.4 per kwh
Hexam - yeah, it's all these other costs that make the other half of the puzzle - wages, interest, bonuses, etc. Plus trying to grow operations, and grow HODL etc.
Argo has 30/JT machines so electricity input costs there are doubled, not sure what their power cost per kwh is though.
But hash will keep growing and the next bear will be brutal.
Different miners and setups have different values. I think Cleanspark's were around 4.6 or something per kwh last time I checked. 40% overhead for cooling sounds too high to me, I think the mining industry achieves 10-30%.
That's not true.
You've all missed my calculation adventures, so here's one for old times sake.
The S21 Pro that Cleanspark are buying is 15 J/T. It can mine for an electricity cost of $29k.
Workings:
- Current network hash of 630EH
- Rewards only excluding fees of 450BTC per day.
- 1.4EH is required to mine 1BTC a day average.
- electricity cost of 5 cents per kwh
- S21 Pro is 234 TH
- 5983 machines required at 3510 W each = 21MW requirement - add 10% for cooling let's say 24MW
- 24MW at 5 cents per kwh
- 24000*0.05*24 = 28800
What if you add fees? What if the electricity price is lower than 5 cents?
The bitcoin miner investor pool is fairly clued up/experienced is my read. You can see the way Mara has been punished for their operational issues and liberal use of the ATM - same with Riot and HUT with their issues, while CLSK has executed well and been rewarded by the markets. There seems to be logic to some of the share price movements.
We are still waiting for the point when the investor pool widens and things go crazy, but to me that requires BTC heading to 100 to bring more people in. It won't go as many multiples as 2021, but I think we could see 3 to 5 or more x's on a good number of miners if BTC goes above 100 - and I think it will all happen relatively quick.
I'm looking to close a high percentage of my holdings after bitcoin goes above 100k (if it happens).
Helios was switched on in 2022, so most were switched on then. Galaxy seemed to get a good PPA, and that is Argo's main asset just now, and more than makes up for the inefficiency of the ~30 J/T machines they have. However Argo's overheads are high (why who knows as all the work gets done by the host - Galaxy - so they have a lot of staff doing seemingly nothing), and the interest payments are a drag.
So at this point in time they are treading water fine in my opinion - perhaps sinking a little but not enough to drown them.
The real issue is the hosting agreement ends at the end of the year and it's not in Galaxy's shareholder's interest to continue the current agreement as it is, so I can't see that happening and that's the brick wall they are racing towards.
Yes they are overvalued by any fundamental analysis, but no chance would I short a bitcoin miner in a bull run. At the end of the bull run yes, but who knows when that is.