Member Info for HarChris

That's fair enough, I'm taking a much more cautious approach as I'm seeing lots of red flags that could prevent the next bull run catching alight like the last. My aim is to build some miner holdings like you say in the 'bitcoin is dead' zone but assume that each rally over the next few years is a simple bear trap/ relief rally that fizzles out. But with the way the miners move the likes of clsk, riot, hut8 etc would still bring 100%+ returns from those sorts of relief rallies alone.

And if I'm wrong and it carries on through and bitcoin hits new highs, well, I'll have to admit i'm wrong and be happy with my smaller returns!

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Also for those interested this is a good thread on MicroStrategy recently published by Blockworks Research:
https://twitter.com/blockworksres/status/1595811891409915904

Absolutely AB but whilst it's in no way scientific a lot can be said for observation of the world around us.

I mean take yourself for example, you've gone from expecting life changing returns from bitcoin miners to now just waiting for a decent exit price in the years ahead. Note the number on here that when challenged also admit that they are going to be less greedy in the next bull run and will be happy with exiting with a profit. Many disillusioned in my own friendship and professional contacts, those that have stop dca'ing, those that have sold out and aren't sure if they'll buy back in, those that are waiting for the next bull but no longer think bitcoin will set them up for life and yet I don't know anyone being enticed to the space for the first time.

What we can say for sure without having to dig into the detail is that adoption is not occurring at an exponential rate like some predicted, there are not millions of new bitcoiners each and every day, growth is not happening like we saw with Apple and the smart phone.. like the internet.

That's not to say it won't have its uses and still end up a network back in the trillions of dollars but I don't think the likes of Saylor are winning the argument currently.

And what I mean by that is fast forward two years and you'll probably find that the space is filled with the same people as it was before. In the news we aren't seeing HNW individuals being sold on the idea and buying for the first time, in fact doubts remain over whether those with deep pockets/ institutions that entered the space in 2020/21 (think O Leary, Scaramucci/Skybridge etc) are even going to stick with it long term.

Whilst the majority of HODL'ers are continuing to hodl (as seen by the high percentage of coins that haven't moved in 12 months) it also means that demand is totally lacking, there isn't the next cohort of crypto/bitcoin enthusiasts coming through. Add to that the cost of living crisis and lack of disposable income the average person will have now and it's hard to see the longstanding believers even having the funds to continue dca'ing over the next few years.

That doesn't mean we won't have another bull run, we almost certainly will and the whales know this. They're loading up now and will likely be exiting en masse when they get an exit price they are happy with in the years to come.

If the biggest bitcoin whales are increasing their holdings all the while bitcoin has fallen 75% that's concrete proof that inew entrants are not joining the space, instead the already converted are doubling down and concentrating the supply into fewer and fewer hands. Further proof of this is that 66% of coins have not moved in the past twelve months... we are most likely seeing more people selling out of bitcoin than buying for the first time.

Whatever the price does next it can't be argued that mass adoption is happening right now.

That is not adoption, that is long standing holders moving funds from exchanges to wallets.

Ever more bitcoin concentrated in the hands of a few long standing bitcoin advocates is anything but adoption. Further accumulation from three or four huge entities is anything but adoption and makes the potential for bitcoin ever being meaningfully used ever less likely.

We are seeing prices 75% off highs and yet seemingly no new entrants itching to enter the space yet talk of many leaving the space potentially for good. Michael Saylor, Bukele, Cathie Wood, many of the old times et al doubling down is not adoption, it's just typical gamblers mentality.

'HC, This will rise hundred percent before riot does.'

This is nonsense. Riot is stronger than it ever was and is perfectly placed to take full advantage of the sector weakening further. They are one of the only miners that can comfortably expand throughout the next 18 months without any stress on their finances - By mid 2023 they will be at about 15EH/s whilst Argo will either be bankrupt or fighting for survival at 2.3EH/s. By the next bull market they could easily be at 20EH/s+ with the amount of liquidity they have.

Experts in the space, not me, rate Riot as having the strongest balance sheet out there and Argo the weakest.

Let's take CleanSpark (i'm not invested but a helpful comparator).

Argo still valued at $40m, Clsk $103m. This month clsk will mine three times what argo mines so operationally speaking it's already better value, they are also able to generate cash still at $17k so has no pressing funding needs whilst Argo is haemorrhaging about $2m a month.

As a punt Argo is arguably worth the risk at this stage if it was about 4.75p a share but at $40m the risk/reward is very poor.

It will all happen in the blink of an eye, when the axe finally comes down. We've established that Argo probably still has about 5 months of cash runway from the recent actions but even if bitcoin were to recover to say $20k that only adds a month to the cash runway. Even $25k wouldn't be enough to make it to the back end of 2023 and that would be a 50% jump in bitcoin price.

By holding you're essentially betting that bitcoin recovers before the next bit of bad news from Argo - good luck, but I don't think the odds are with you.

For example if a miner like Argo has simply nursed their way through the bear market and are operating at just 2.3EH/s with old machines and heavily indebted they are still unlikely to be able to raise the sort of cash needed to ever pay off those large long term debts they have, especially as global hash rate will probably be something like 500EH/s or higher in the next bull market.

AB the next bull run is different because the last one saw most of the miners starting off on the same footing, that won't be the case for some. The sweet spot will be expanding as much as possible without running into financial pressures themselves and avoiding heavy dilution at the peak of the bear market (if things are to get worse).

I've gone for Riot as they appear to be perfectly placed now. They built significantly in the bull market with equity (raising huge amounts at a share price 1200% of today's price) and also continued to raise money this year before things got particularly bad recently so are sitting on $255m cash AND a very large HODL - in other words they are extremely liquid without having to issue more shares now but if they really had to there is $300m worth to access.

I don't feel you quite engaged with what was said in the article though Chae - to me Marathon looks a little more precarious than you seem to think.

https://compassmining.io/education/falling-bitcoin-price-debt-obligations-loom-for-marathon-digital/

Interesting read for those looking at the North American miners - it was this that swayed me towards Riot yesterday rather than Marathon Digital. For those not bothering to read this is an interesting concluding comment:

'Marathon Digital will likely continue to need both Bitcoin’s price to rebound and more hashrate to come online quickly in order to meet debt obligations. Marathon Digital may be edging closer to a similar fate as Argo Blockchain (ARB.L, ARBK) and Core Scientific (CORZ), both reporting significant cash flow issues before alerting the markets of possible insolvency.'

Thoughts Chaebol? Also after criticising clsk for having remuneration incentives tied to hash rate is this really true for Mara?!

'Stock compensation: Stock compensation has dropped for the first nine months of 2022 to $18.9 million, from a total of $152.3 million in the same period during 2021. The compensation is tied to the company achieving its future planned hash rate of 23 EH/s. It would be fair to assume that senior management will receive an element of the stock compensation at various hash rate levels up to their target.'

Ps sorry for double posting, forgot to add the link!

Interesting read for those looking at the North American miners - it was this that swayed me towards Riot yesterday rather than Marathon Digital. For those not bothering to read this is an interesting concluding comment:

'Marathon Digital will likely continue to need both Bitcoin’s price to rebound and more hashrate to come online quickly in order to meet debt obligations. Marathon Digital may be edging closer to a similar fate as Argo Blockchain (ARB.L, ARBK) and Core Scientific (CORZ), both reporting significant cash flow issues before alerting the markets of possible insolvency.'

Thoughts Chaebol? Also after criticising clsk for having remuneration incentives tied to hash rate is this really true for Mara?!

'Stock compensation: Stock compensation has dropped for the first nine months of 2022 to $18.9 million, from a total of $152.3 million in the same period during 2021. The compensation is tied to the company achieving its future planned hash rate of 23 EH/s. It would be fair to assume that senior management will receive an element of the stock compensation at various hash rate levels up to their target.'

I look at the bears like Il Capo on twitter and I do wonder if they are worth following at this stage. You only have to look at the bull market to see that they get overly carried away at both ends of the spectrum and start to lean on the influence they have built for themselves.

Not to say we won't see bitcoin go as low as as 12k and it would be foolish to ignore completely those that have been more or less on the money til now but still worth remembering, the same people were predicting $250k when bitcoin was at $60k.

Yeah I got very lucky haha $3.914 to be precise - cheers!

It's my only miner holding for the time being, going to just sit on this unless the sell off deepens further.

Yeah, it's a shame as Peter Wall's shareholder engagement drew many in here and helped him build trust with the shareholder base but in the end of the day what distinguishes the best miners from the worst is (i) the amount of money raised in the bull market, (ii) a high ratio of equity to debt financing and (iii) a ppa

If Peter had got the big things right Argo would be one of the best, if not the best, miner now.

Yeah the ppa is another major selling point and they have massive data centres and facilities with the capacity to grow enormously, starting with an increase to 12.5EH/s by early 2023. Sitting on $255m cash is the real selling point though for me, without having to dilute at these 52 weeks lows they would be able to buy 15EH/s worth of new-in-box machines and probably for half that much if we're talking distressed assets from the likes of Corz and Argo in 2023.

For anyone interest I decided to purchase some shares in Riot at $3.91 earlier, despite this awful backdrop!

Going back over the last few years a few things really stand out. In particular how well they leveraged their high share price in 2021, they acquired the Whinstone data centre in April 2021 for $651m, $80m cash and $571m @ $48.37 a share! They also made another smaller acquisition selling stock at $35 a share.

Currently they have an ongoing $600m At The Market placing and have issued $298m @ an average of just over $8 a share so there's a possible $302m still to execute if needed but most importantly, they have $255m cash on hand and 6825 HODL.

Of course there's the potential for all miners to tumble from here but at a valuation of $650m despite having low debt, one of the highest HODL, $255m cash on hand and access to another $300m if necessary I see them as one of the best placed to take advantage if we start seeing bankruptcies across the space.