Thread by @IIICapital

1/ Billions of dollars are demanding exposure to #Bitcoin mining.

The industry is growing rapidly, massive infrastructure is being built, and global 🌎 #Bitcoin adoption is not slowing down anytime soon.

Reviewed and edited by @blakedavis50

2/ Significant amounts of capital are currently flooding into public #Bitcoin mining companies. They are able to raise billions of dollars for two key reasons.

First, these are high-growth technology companies that actually spin-off a positive cash flow.

3/ Second, many traditional firms may not be able to buy #Bitcoin directly, so they invest in related equities to get proper exposure.

This shouldn’t come as a surprise that Vanguard and Blackrock are the top two institutional holders of $RIOT and $MARA.

4/ This thread is going to break down a potential method to value these companies.

Let’s evaluate just how much they’re roughly worth per ASIC.

5/ As noted in this table, both $RIOT and $MARA have market capitalizations above $2 billion, and they trade at steep valuations compared to the market value of the ASICs they currently have deployed.

6/ At current market valuations, removing their cash, $BTC treasury, and infrastructure capex (if applicable), and assuming their fleet of ASICs contains mostly new generation S19 pros, you’re buying their deployed $RIOT S19 pros at $46,000 and $MARA’s S19 pros at $84,000.

7/ That is more than 5x what you would pay from a broker like @BlockwareTeam.

However, that’s not a completely fair comparison since many more miners will be deployed throughout this year.

8/ Zooming out and using their hash rate projections to value their future fleet at today’s market capitalization, you’re buying RIOT S19 Pros at $11,300 and MARA’s S19 Pros at $11,500.

This is much more competitive, but still, a majority of these are yet to be deployed.

9/ Let’s compare the 2021 performance of $MARA, $RIOT, Bitcoin, and running an S19 Pro @ $0.07 per kWh.

- $RIOT +31%
- #Bitcoin +49%
- S19 Pro +169%
- $MARA +215%

10/ $MARA did outperform, but its high volatility should be noted.

Owning and running S19s is like private equity. There’s not a volatile day-to-day market price, and the new generation machines spit off consistent free cash flow regardless of #Bitcoin’s extreme price swings.

11/ So should you buy public miners or buy and host your own rigs if you want exposure to #Bitcoin mining?

I think it depends on what your goals are, if you want control, and if you prefer less volatility and more consistent cash flow.

12/ Mining in practice is not easy, and it’s one reason why so many prefer to simply invest in large public miners like MARA and RIOT.

It is difficult to procure ASICs, build large mining facilities, and source cheap scalable electricity all on your own.

13/ As an institution, hedge fund, or HNWI, it makes sense to purchase and host ASICs with a trusted partner like Blockware Solutions.

You can buy ASICs, not have to manage physical mining infrastructure, and have full control over what you do with the Bitcoin you mine.

14/ If you are looking to deploy capital to the Bitcoin mining space, Request a Quote from Blockware Solutions.

Discloser: I work here :)

blockwaresolutions.com/contact

15/ And read the full report here!

As always, happy to hear any feedback.

blockwaresolutions.com/research-and-p…