During the bull run, people kept asking me what I thought of the Bitcoin mining sector.
I hated it. But at these prices……
Disclaimer
I’m still not bullish on this space or on crypto in general right now.
Not to ruin future podcast episodes, but……no. Not right now.
Bitcoin mining companies are far worse investments than the coin alone, because you have the added liability of the business itself, and how its success relies on one single asset.
AND they’re all in competition with each other for the same limited asset. Barf. No thanks.
Better just to hold the asset yourself IMO.
This is not too different than the gold mining industry, which as even the most hardcore gold mining investor will tell you, is a terrible industry with a very low level of success.
But the difference there, is time. Many gold mining companies are established and actually produce a low volatility product that has held its value remarkably over decades. And there’s no hard cap or halving events on gold.
This makes established gold mining companies way better investments pound for pound than Bitcoin mining companies IMO.
But at these prices……….
Down, But Not Out??
Bitcoin mining companies are more or less leveraged plays on the price of BTC.
I’ve never seen a need to invest in them, Bitcoin is volatile enough as is and can give you extraordinary returns if done right. as we’ve already seen.
But when these companies fall, they fall much further than the price of their underlying asset, which although risky, does make them intriguing opportunities if the price is right.
The price is already damn intriguing on some of these. Yet I would wait until your personal sentiment on crypto turns bullish before giving these things a real look.
Their prices, initially, may bump with the reversal in the market, but they’re still businesses with balance sheets that got hammered into oblivion in the last 9 months.
You don’t recover from that overnight.
But what many of these companies DO have is a ton of assets in the form of rigs and existing power sources and permits and real estate, which is not nothing. It’s certainly something.
If they can endure and stay solvent, whilst most of their competition falls away (and they will/already have), then look out.
They may actually turn into great investments someday.
Deep Cut
It’s insanely risky right now (so risky, it’s damn near irresponsible), but the one I’m watching the most closely is Core Scientific, ticker symbol CORZQ.
Yes, it declared bankruptcy, hence the ‘Q’, which pretty much means “don’t go anywhere near it right now”.
And I’m not. However…
- Chapter 11 Bankruptcy allows you to restructure and regain, which is what they plan on doing
- CORZ was one of, if not the the most prominent Bitcoin mining companies in the US, and still has boatloads of assets as of right now
- It’s not common, but many companies do come out of bankruptcy and do very well. For example, Texaco, Apple, Sbarro, General Motors, Chrysler, Six Flags, et al.
Regardless, it’s more risk than I normally care to take on. But when prices get low enough, much of that risk goes away.
This is CORZ before the bankruptcy, to show its historical data. Last print was Dec 30, 2022, one week prior to today’s posting.
The price of CORZQ currently sits at .086
This would currently put it at 118x off of its 2022 high of 10.2
BTC conversely, is about 4x off of it’s highs currently. Quite a difference.
YOU STILL NEED TO BE VERY VIGILANT.
And please understand, I’m just looking at it and following it, unlike before when I didn’t care at all.
No recommendations of any kind here.
But I really want to see how CORZQ restructures and comes out of this. And I think I’ll have lots of time to do that.
I follow them on Twitter, and and paying more attention to the space itself than I ever have.
Not for now, or the near future. More like the medium future. Ish.
But if a company can go from a 3 Billion dollar market cap, to a .03 Billion dollar market cap — and still keep most of what it has? And the BTC market rebounds?? I would be paying attention to it, for once.
Source: Macrotrends.net
There’s also a very good chance I may discover a much better option in that time as well. But the CORZQ story is the most intriguing to me right now.
And if for some reason I pop on one of these, and the market bulls again, I will be furiously taking profit on the way up.
This is not a long-term buy and hold space IMO.
But it could be a very unique opportunity if all breaks right.
— VP
Nothing you see here is financial advice. The author is not licensed to give that. DYOR and own your results, good or bad.