NEWSROOM

Crypto as the New Inflation Hedge

According to many accounts, Bitcoin has supplanted Gold as the primary means to invest in a store of value as a defense against the boogeyman of Inflation.

One of the most interesting data points to arise during this Q1 earnings season is a note from Bank of America several days ago pointing out the explosion in references by reporting companies of the term “inflation” as a major driver impacting results and guidance going forward.

The Fed is rooted in the notion that inflation at this stage cannot be anything but transitory because it reflects mere “base effects”, which is code for a simple year-over-year comparison issue because of the deflationary jolt inspired by the initial economic paralysis that accompanied the outset of the pandemic one year ago.

However, many of the current manifestations of inflation worries aren’t based on year-over-year comparisons, but on rising prices relative to long-term averages driven by injured or crippled supply chains or production bases.

Copper is a good example. So is oil. So are the massive shortfalls in container shipping efficiency.

In other words, it’s not just a function of a deep well a year ago. It’s a crippling of our collective ability to deliver key goods. That may turn out to be transitory in the end analysis. But it may be more lasting.

Right now, markets aren’t sure. But the risk of the more problematic outcome in this story is being priced into the new store of value market – Bitcoin. And we are only in the early innings of this phenomenon.

That should help to drive the crypto story in the months ahead, possibly putting crypto mining stocks back in the spotlight following the recent corrective swing. With that in mind, we take a look at a few of the key names in the space, including Riot Blockchain Inc (NASDAQ: RIOT), HIVE Blockchain Technologies Ltd (OTC US: HVBTF), ISW Holdings (OTC US: ISWH), and Marathon Patent Group Inc (NASDAQ: MARA).

 

Riot Blockchain Inc (NASDAQ: RIOT) is expanding and upgrading its mining operations by securing the most energy-efficient miners currently available. The company also holds certain non-controlling investments in blockchain technology companies.

Riot is headquartered in Castle Rock, Colorado, and the company’s mining facility operates out of upstate New York, under a co-location hosting agreement with Coinmint.

Riot Blockchain Inc (NASDAQ: RIOT) recently announced that it will achieve an estimated hash rate capacity of 1.06 Exahash per second with the deployment of the newly received 2,002 S19 Pro Antminers.

“Exceeding 1 EH/s in hash rate capacity marks a major milestone for the Company,” said Jason Les, CEO of Riot. “While we are proud of this accomplishment, we view it as the successful completion of just one of many steps of our ongoing growth plan. Riot continues to receive and deploy next-generation miners from Bitmain and remains on schedule to more than triple our currently deployed capacity by the fourth quarter of 2021.”

And the stock has been acting well over recent days, up to something like 11% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -24%.

Riot Blockchain Inc (NASDAQ: RIOT) pulled in sales of $5.3M in its last reported quarterly financials, representing top-line growth of 340.7%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($235M against $2.4M).

 

HIVE Blockchain Technologies Ltd (OTC US: HVBTF) owns state-of-the-art green energy-powered data center facilities in Canada, Sweden, and Iceland which produce newly minted digital currencies like Bitcoin and Ethereum continuously on the cloud.

Its deployments provide shareholders with exposure to the operating margins of digital currency mining as well as a portfolio of crypto coins.

HIVE Blockchain Technologies Ltd (OTC US: HVBTF) recently provided an update on its fiscal year-end coin inventory as it continues to HODL coins. According to the release, as previously announced since the beginning of the calendar year 2021 HIVE has been a Holder of all mined Bitcoin and Ethereum coins and has been banking them in cold wallets.

According to management, “As at the completion of our most recently completed fiscal year ended March 31, 2021 we held over 320 Bitcoin and over 20,030 Ethereum coins. Our strategy is to continue holding coins, as we feel that it will benefit our shareholders. The dollar value of our crypto assets at fiscal year-end was approximately US $60 million and cash was US $36 million.”

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 3% in that timeframe.

HIVE Blockchain Technologies Ltd (OTC US: HVBTF) managed to rope in revenues totaling $17.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top-line growth of 170.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($20.8M against $15.4M).

 

ISW Holdings (OTC US: ISWH) is the most speculative name on this list, but one that may deserve serious attention given its cheap per share price and its unique approach to operations in the crypto space. According to its recent communications, the company has strong and growing mining operations, capacity, and equipment deals in the works, with operations in partnership with Bit5ive in Pennsylvania and a coming footprint in Georgia.

When Bitcoin was still at $10k/coin, ISWH was engaged in a long-term strategy to drive shareholder value in the space with its POD5IVE strategy. Based on publicly available information, the company is on track for very strong growth in 2021 based on the launch and ramp-up of its crypto operations.

ISW Holdings (OTC US: ISWH) conducts mining through its Proceso POD5IVE mining pod, a fully self-contained high-PUE mining solution designed, assembled, and installed in partnership with Bit5ive at the Bit5ive 100 MW renewable energy cryptocurrency mining facility in Pennsylvania.

It has since tripled its fleet of mining pods. Each pod is powered by 280 mining rigs and is capable of driving roughly $2.9 million in annualized revenues (at current cryptocurrency price levels).

ISW Holdings continues to build out its own mining capacity, with plans to bring multiple additional pods online this year. However, data from pod mining operations is also being collected for the purpose of marketing the POD5IVE datacenter to other businesses and individuals interested in a self-contained industry-leading cryptocurrency mining solution.

ISW Holdings (OTC US: ISWH) also continues to make good on its Anti-Dilution Initiative, which was established in 2020. To date, the Company has reduced outstanding shares by nearly 25%, reduced authorized shares by 88% down to 60 million, and eliminated over $3.4 million (or 94%) of outstanding convertible debt. As noted in its recent corporate update, the Company anticipates at least threefold growth in topline performance in 2021 versus 2020 as its expanding crypto mining operations fully ramp up.

 

Marathon Patent Group Inc (NASDAQ: MARA) currently operates its proprietary Data Center in Hardin MT with a maximum power capacity of 105 Megawatts.

Once fully deployed, the Company will have 21,500 Antminer Bitmain S-19 Pro Bitcoin Miners in operation at this facility. MARA also owns 2,060 advanced ASIC Bitcoin Miners at a co-hosted facility in North Dakota.

Marathon Patent Group Inc (NASDAQ: MARA) recently published unaudited bitcoin production and miner installation updates for the first quarter, ended March 31, 2021.

During the recent period the company: Produced 196 new-minted bitcoins in the first quarter of 2021, increasing total bitcoin holdings to 5,134.2 with a fair market value of approximately $301.9 million as of March 31, 2021; At March 31, 2021, cash on hand was approximately $212 million and total liquidity, defined as cash and bitcoin holdings, was approximately $513.9 million; and Received approximately 10,300 S-19 Pro ASIC miners from Bitmain during the first quarter of 2021.

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 10% in that timeframe.

Marathon Patent Group Inc (NASDAQ: MARA) managed to rope in revenues totaling $2.6M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top-line growth of 854.2%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($143.6M against $1.4M).

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