Bitcoin mining stocks are the ultimate bull market leverage play
There are many tailwind factors that indicate that the USD price of bitcoin is set to propel upwards in the coming days and weeks.
First and foremost, the best way to get exposure to bitcoin is to buy bitcoin and secure it through a hardware wallet like the ColdCard. The best risk averse bitcoin strategy is to keep it simple, stupid. It’s very difficult to predict markets and it’s especially not for those with weak stomachs. The only way to guarantee that you still possess your bitcoin through the ups and downs is through self custody.
With that being said, there are many tailwind factors that indicate that the USD price of bitcoin (currently hovering around $42,500) is set to propel upwards in the coming days, weeks, and years.
The SEC is imminently (according to most analysts) set to approve several Bitcoin ETF products, which will essentially open the floodgates to bitcoin for all of America’s major financial institutions.
We also expect that The Fed will no longer increase rates, and will probably cut them at some point in 2024. Historically, this has led to a resurgence in the Bitcoin USD price.
In addition to buying bitcoin, there are several ways to gain somewhat leveraged exposure to bitcoin.
You can mine bitcoin yourself with self hosted machines, which garners a steep learning curve and only secures profitability if you have very cheap energy resources. The benefit is that you own the machine. The downside is basically everything else.
You can also choose to buy and host ASIC rigs with several hosting providers (such as Blockware), but this carries significant counterparty risk and a contractual commitment to pay for hosting services.
You can trade bitcoin futures on platforms like LedgerX. However, given that bitcoin is extremely volatile, it’s easy to get wiped out by trying to time the market. Trading leveraged bitcoin is a great way to end up with no bitcoin.
In my view, the best way to acquire leveraged bitcoin exposure is through the stock market, specifically through bitcoin mining companies. While the likes of Microstrategy ($MSTR) has made a killing over the last few months, bitcoin mining companies serve to add much greater upside potential (and downside risk).
In the last bull market, bitcoin mining stocks acted quite well as leveraged bitcoin plays. Simply put, when the price of bitcoin rockets upwards, mining bitcoin on an industrial scale becomes VERY profitable. Suddenly, a company breaking even on $50MM in annual revenue can instead run a massive profit.
Let’s take a look at a few publicly traded miners…
During the 2021 Covid money printer surge, RIOT 0.00%↑ went from 10 bucks a share to $70 in just a few months.
It was a similar situation for MARA 0.00%↑ , which saw a 10x boost from Dec 2020 to April 2021.
Marathon and Riot are the two biggest publicly traded miners, now sporting multi billion dollar market caps.
Check out this chart I pulled off of X.com (still looking for attribution) that shows revenue numbers based on the price of bitcoin. Should the price reach new all time highs, these companies are set to be swimming in cash (and bitcoin).
Hopefully, this provides some clarity about the short term upside potential of these companies. But again, it’s worth mentioning that these are very risky endeavors.
By the way, happy new year! Current Thing Capital will be posting much more frequently from here on out so make sure to subscribe!
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You failed to mention that these "approved" Bitcoin ETF are nothing more than central bank digital currency (CBDC), which defeats the entire purpose of Bitcoin.
Bitcoin is NOT TRACKED. Absolutely no one can track what you use your true bitcoin CRYPTOCURRENCY.
US central bank approved CBDC is, in fact, tracked. It's the entire reason why the central bank approved bitcoin in the US. They don't want Americans using currency they can't track what you're buying with it and approve whether you can use your own money to buy items they don't approve of (such as firearms & ammo.) The whole point of CBDC is to base whether you can you use your money based on your social credit score, i.e. whether you are a good little useful idiot for the communist left and posting good little komrade comments on social media. All dissenters will be prevented from buying anything. (see also communist china and its social credit scoring system).
When it looks like a duck and acts like a duck, check its ass. It's NOT a duck. It's a trojan horse. And you're contributing to it with your ignorance. Do more research before you exhort your followers to buy a trojan horse that will ultimately destroy the United States.