Also, one of the key things holding miners back is an established valuation methodology.
Everything I have seen so far is utter rubbish - as ‘analysts’ currently seem unable to include all the relevant variables in their models.
Ultimately, a big system dynamics model is needed to estimate total global hashrate, and individual miners’ modelled hashrates can then be used to estimate monthly/annual BTC production. Link this up with Plan B’s price estimates, and you can then build a DCF model to calculate reasonably robust P/E ratios.
I’d be surprised if someone somewhere hasn’t already built the hashrate model.
I think total hashrate will increase several-fold, but not at the rate people expect. I think a lot of small scale miners, inefficient miners, and miners powered by fossil fuels, will all drop off the network - either through lack of profitability, consolidation or regulation. I think MARA and RIOT will lose a lot of their hashrate in the next 5 years due to the latter - or end up paying for new facilities powered by renewable energy.
I think ARB are well placed to remain in that top-tier of miners and will survive all the competitive forces that will reshape the sector in the next 5 years.
Didn’t Peter Saylor say that the sector is eclectic to grow by at least 30x over the next 5 years; many miners will fall by the wayside, but I think ARB will be one of those miners that achieves the 30x.
2 things to bear in mind:
- Forward P/E of 10 is low for the sector.
- Forward P/E of 10 requires us to make assumptions about the price of Bitcoin over the next 10 years
Plan B’s S2F model suggests BTC will reach $1m following the next halving so in 4 years. That’s 15x the current price. Even if the block reward halves, that’s 7.5x revenue. And similar will happen again 4 years later.
Hexam, I’m not expecting that list in November - I think that’s a potential 3-month news flow. Each bit of news should lead to a change in sentiment.
And yes, I don’t think 240 coins is a realistic expectation this month (I’d like to see 200+ though) but it definitely is next month.
If we’re still sub-200 next month then we’re into serious issues territory, specifically regarding the company’s ability to deliver. This would shake my faith in the company hugely.
It does matter. There’s a finite amount of capital available to be invested in the sector - yes, it’s growing but there’s huge competition for that capital.
There’s also competition for that capital between Bitcoin itself (and the new ETFs), other cryptocurrencies, crypto miners and wider ecosystem companies (e.g. Coinbase).
More and more of these companies are looking to trade publicly. Each of these companies attracts a % of the total capital available.
Core Scientific are expected to IPO next month, many other miners will follow. If ARB continues to drag its arse then investors will look elsewhere. Yes, that capital will likely flow to ARB at some point, but with so much competition in the sector, it won’t be sticky - it’ll just drive a pump and then be reinvested elsewhere.
I think this is the thing that PW has failed to grasp; stay ahead of the markets, getting the SP up means it’s easier to raise capital - less shares need to be issued, for the same amount of money. If he’s behind the markets, and the SP is pushed down, it’s much harder to raise capital - less shares need to be issued, for the same amount of money.
I wouldn’t have any issues with a sequence of small capital raises from $100 per ADR to pay the instalments for miners. But PW needs to get the SP moving.
Paying in $25m instalments for example, $100 per ADR, that could be 2.5m shares (<0.5% dilution) which wouldn’t damage sentiment or the SP. At $200 per ADR, that would be 1.25m shares (<0.25% dilution). This would be a mutually beneficial approach to growing the company.
i calculated about 120 per day earlier in the year.
It’s peanuts relative to the Bitcoin mining. ZCash was outperforming Bitcoin earlier in the year, but it has dropped off massively.
If ZCash significantly outperforms Bitcoin then that should be another catalyst for SP growth - I can’t see it happening though.
Volume on NASDAQ is pitiful. It’s less to do with churn, and more to do with it being easy for shorters to drive the price down - hence the daily short volumes.
Investors are looking elsewhere.
It’s going to take a good flow of news to get the SP moving. Fortunately PW is a stellar PR performer - we’ll just need to wait another fortnight for him to ply his trade.
- Confirmation of the extra 0.7EH being installed
- A good operational update; 240 coins mined, ~90% margins
- EPIC machine updates (this is the big one; big news here will ignite the SP)
- Texas updates (construction progress, estimated cost per kWh, immersion implementation)
- Clarity that future miner orders will not be funded through further dilution
- Plans to host mining capacity for other companies in Texas, and how that translates to a significant premium due to ARB being so efficient
There would be several major re-rates if we got all of the above.
Surely SP is highly dependent on BTC price… the forecasts must surely make an assumption re mean BTC price? And I presume their BTC price assumption is hugely conservative.
If not, they aren’t worth the paper they’re written on.
I’ve generally been aiming for the following;
SP in pence ˜ monthly BTC mined * (BTC price in $/50000).
The dilution scuppered that though.
I think the vast majority of investors are reactive; they don’t understand Bitcoin mining and only look at BTC mined and BTC price. I don’t think Texas hashrate is priced in currently, probably because the market doesn’t have much confidence in that hashrate being achieved.
I think Suresh alluded to something along these lines last night too.
What I’ve been wondering is there’s another deposit nearby, but connected to Havieron, do NCM get a 70% share of that too?
What determines whether a deposit is part of a larger deposit or entirely different?
Well, that’s as convincing as it gets… Havieron will get significant resource upgrades, NCM just want to get it mined ASAP. Mine life will be extended and/or processing will be upped.
Life-changing investment opportunity, even after so much SP growth over the past 18 months - I think we all knew this though. Let’s see how the market reacts tomorrow.
In fact, you’ve probably just unintentionally ramped ARB.
Energy costs are expected to stay high for 6+ months, and may not even fall.
Texas, powered by greeen energy, with the latest Antminers and immersion, could well be the most efficient BTC mining facility in the world.
If energy costs stay high, and BTC price crashes post-bull run, then a huge amount of total hashrate will be switched off and ARB will just pick up the slack at a profit.
Mara, RIOT, Hut8, HIVE, only Bitfarms comes close, would all be loss making well before ARB would be.
I was thinking this last week; what is PW’s objective here?
Is he a crypto nut that just wants to run a company with a big, ever-growing hodl? Arguably there’s a perverse incentive here if he’s being paid in BTC.
Is he a good CEO that takes his fiduciary duty’s seriously and wants to grow value for his shareholders?
I would really like to know what his motivations are for serving as CEO of ARB.