Member Info for HarChris

It's important not to lose sight during this discussion that what's okay for bitcoin is not necessarily for the miners. Look across twitter and the chatter going on and you'll see that a consensus is forming that this crypto bear market, this crypto winter is going to be a long and bleak one. Whilst this is okay for bitcoin it isn't for the mining industry, miners have been absorbing losses in the hope that bitcoin will turn and many of them are running out of time without additional funding., funding that won't readily be forthcoming. Corz will be wiped out very soon, Argo's runway at $17k BTC is about 4 months tops, others will start showing distress well before any solid upturn if it doesn't come before 2024.

The investment case for Argo was tenuous at $21k, at $17k and 8p a share with 12+ months of low prices predicted the investment case is non-existent.

Sure but when they peak we'll still be dealing with interest rates at roughly 5% vs 0.25% just a year or two earlier, that's 20 times higher. It won't be a case of 'right back to where we were'

I think our views are largely aligned, I'm just slightly more pessimistic on bitcoin's future than you are. I also think there's a decent chance of $100k being reached in the next cycle although I wouldn't be confident enough to hold that long in the next bull market. Personally think there's more than a chance of things fizzling out earlier than expected.

I'm hoping for some sort of $14k to $60k move, with enough committed down here to more than set me up - the risk will be bigger next time though as any failure to push on towards $100k and new all time highs will be the death knell for bitcoin (and total capitulation).

Genuinely fascinated to see how it all pans out in the future.

Yeah I just think the other elements support the bitcoin ponzi narrative, those promoting bitcoin are largely bad faith actors. Look at the way so many were convinced to buy at $50k, the narrative shift was instant... 'institutions are coming, there will be no boom and bust this time'. Then you had Raoul Pal getting in on the act throwing out crazy price predictions once he had his audience glued to his every word (bitcoin $250k-$400k, ETH $20k by March 2022) and Saylor telling people to sell everything, remortgage your house, max out every loan you can any buy bitcoin. Anyone that listened would be in trouble now and some will have.

The point is that the likes of Apple didn't need to push so hard to convince the world about its product, it developed naturally. I think at this rate there will be less interested in the space going forward rather than more.

There is currently one genuine obvious use case for bitcoin and that's for remittances, sending money back to poorer parts of the world where local currency inflation is impoverishing them. That won't be enough to make this a multitrillion dollar network.

There was always going to be a pump after it was walked down in the early hours. I'm not expecting my bitcoin buys to go through today but it is looking more and more likely that they will eventually.

Poorinvestor, only because you asked:

Wednesday: 'I’m still saying, over 18,000 open tomorrow and over 20,000 Monday. Save my post, so you can make a statue for me also next to chaebol’s lol.;-)'

Thursday: 'I’m still saying 21,000 Monday, in my opinion.'

Slight climbdown Friday: 'ARB is playing catch-up with btc. Interesting where it ends today. I’m still saying BTC is going to be around $19,000-$20,000 Monday.'

Your statue is yet to be commissioned!

AB we're broadly in agreement but these sorts of cycle are not conducive to bitcoin's long term success, we can't just keep saying bitcoin's been through worse and will get through this again and expect to suddenly see bitcoin at $250k. The difference between $1k bitcoin and $10k bitcoin is about $170B, the difference between $10k bitcoin and $100k bitcoin is ~$1.7T, the difference between $100k bitcoin and $1M bitcoin is ~$17T, to make the jumps you need exponential adoption yet I don't believe that's what we're seeing. Instead what we will be seeing is the 'believers' doubling down and staying the course and new entrants getting out of the space for good. So far we've seen institutions enter the space but over time seeing them more likely to start pulling back rather than new entrants joining in.

Bitcoin will not be a success if a greater amount of the network falls into fewer and fewer hands.

There's a difference this time around though. Bitcoin was always a fringe movement, advocates were generally ignored and spent their days talking to themselves. Then 2020 came around, a confluence of factors struck at once, institutions showed interest, Musk got involved, Zuckerberg, Bezos, all of them will be next we heard, millions of ordinary people bought in at $20k, others finally started to believe at $30k, many more rushed in at $40k, $50k, people were told this cycle is different, we won't see a big drawdown this time, bitcoin has $100k in its sights and then $250k, this is a once in a lifetime opportunity...

Unlike any other cycle this one will actually see people put off for good. And what about institutions, will they be looking on desperate to join in on the fun? We've seen Telsa/Elon sell the majority of their holdings, we've seen MicroStrategy/Saylor are nearing $2b in losses now with the very real threat of margin calls in the future, Kevin O' Leary is now saying he won't invest again unless the regulation he demands gets implemented.

There will certainly be rallies, that's without doubt, but the chance of striding past $100k next bull market does rely on coming out of this bear market in one piece and that isn't guaranteed right now.

Put it this way this saga has vastly reduced the probability of the next bull run revving up in the next 6 months and has vastly increased the chance of bitcoin going <$14k - this has massive ramifications on the bitcoin mining industry and lowers the risk/reward payoff on almost all miners across the sector and considerably magnifies the likelihood of a good number of them going out of business before any upturn.

I struggle to buy that any of this is good for bitcoin long term. I get the distinguishing element between crypto and bitcoin but the fact remains that the majority of the west are unconvinced by it all, only a small percentage own any cryptocurrencies and a much smaller percentage than that have any meaningful amounts invested. All this'll do is reinforce their view that the whole space is one giant ponzi, corrupt to the core and with no realistic chance of solving any problems faced by society today.

I accept that cycles are inevitable but you don't win people over and increase mainstream adoption with cycles as extreme as we're seeing, this sort of thing scares ordinary people (and institutions) away for good. It's a long road back IMO.

I saw this rumour going round on twitter too but I can't see how there could be anything in it? Why does it make a difference what he's paid in, he'll get the same money either way... if he's paid in bitcoin and he thinks it's going to go lower he can just convert it to fiat, if he thinks it's at a low he'll get even more bitcoin and can hold on and sell when it goes up.

What is the point of bitcoin trading 24/7? It barely moves over the weekend.

I'm not in the $10k camp PI and partly agree with you but I don't think we'll see a rise from here, I'm expecting a new trading range between about $14k and $17k for the foreseeable, which is fine for bitcoin but catastrophic for many of the miners. I've got buy orders in at $14.9k and $14k for bitcoin, if it goes lower fine, I'd be happy with that level for a medium term hold. As for miners, they could go a lot lower yet.

If the likes of Saylor and other big entities end up getting margin called then there's no knowing just how low bitcoin could go but I happen to think it's unlikely in this cycle.

Hmm yeah I was worried about that. I would be waiting for it to go to zero now I guess, I think it's as close to a dead cert as it can be following this recent drop in bitcoin (and the damage it will do to the space in the short term).

Chaebol I don't get what the 98% drop has to do with it though? It's dropped so far because it's going to zero, if I shorted at a £1 or 20p it's still 100% gains...

I have never once shorted a share but I’m thinking this is the time, it’s got to be a near dead cert from here to go to zero, it’s basically a bet on Bitcoin failing to recover (significantly) by February.

Chae could you help me, if I were to short Corz what would be the best platform for it? Plus500?

I still can't get over the massive Corz pump on Friday. Let's break it down a bit thanks to the help of a recent article:

Debt $836m and from this $17m monthly debt repayments. At $21k monthly revenue equalled $25m, generating cash of £7m per month. $7m cash generation vs $17m debt means a net loss of $10m per month. But now today BTC is below $17k, they are now generating $20m revenue and ~$2m cash - take off the $17m debt and they are burning $15m a month.

They are keeping going thanks only to an ATM stock agreement of which ~$70m is still available. However their market cap is now $69m (after the pump that is!) so if they draw down on the last of those shares to survive a bit longer they will have to double the shares in issue... just to survive ~ 4 months. Assume the share price drops back again, they'll need to issue 150% more shares to survive those 4 months.

At the end of those four months they still owe $836m debt, they have no cash left, they've at least doubled the shares in issue, they are still haemorrhaging cash (I estimate cash flow neutral at $30K BTC).

They do have massive operations but the value of those machines/facilities has fallen from about $850m (roughly equal to the debt) to at most now $200m.

Besides a bitcoin rally within the time frame mentioned Core Scientific is dead and the equipment financing lenders (NYDIG, Mass Mutual Barings, Trinity etc) will take control of the operations and shareholders will get nothing.

And how on earth does Argo suddenly improve their cash flow management? Can they magic up a higher BTC price and therefore higher revenue? Can they command a downward adjustment in difficulty or cheaper electricity?

This is exactly what they were doing in October when they put out the 'Strategic Actions to Strengthen the Balance Sheet' rns. It was proactive and sensible risk management from PW, the problem was they put it out there without executing the placing, therefore cratering the share price and jeopardising the main route Argo could go to raise the necessary capital for survival. Pull off that placing and Argo would be 25p today with at least a 10 month runway and a higher hash rate (as they wouldn't have needed to sell that second batch of new machines).

I get what you're saying but the truth is they can't survive much longer without a capital injection and the strategic options they had are no longer available. It's cross one's fingers and pray bitcoin recovers by January (or dilute Argo to absolute oblivion).

MicroStrategy's bitcoin history is laughable, they went from buying 10000-20000 BTC at a time to just 130 bitcoin most recently in September. The company with a strategy of acquiring as much bitcoin as they possibly can is literally having to sit out a bear market that has seen the price fall 75% from highs.

You couldn't make it up.

Yeah exactly, whilst in theory the difficulty adjustment should provide a level of efficiency and order (as margins get tighter a percentage switch off, lowering difficulty and allowing others to continue operations) instead what we are likely to see is a whole host of factors coming to a head and chaos ensuing. Very soon at $16k BTC.

As we know Hexam billions were raised in 2021 by miners and then hundreds of millions more in debt in early 2022 which allows almost all miners to run at a loss for a considerable time. There is obviously a limit though and for most the debt markets will be a no go now and with depressed share prices they'll be able to raise barely a tenth of what they did previously, if that. Even those like clsk that have been expanding in the bear market will be forced to take a more prudent approach soon.

I don't believe the Russia/China theories personally, I think entities are simply racking up losses for as long as they can and hoping bitcoin turns, but if BTC doesn't pick up by spring 2023 I think hash rate will crater.