The Value Argument for Crypto Stocks: Spotlight on COIN, RIOT, ISWH, and MARA

The long-awaited pullback in the crypto space is finally upon us. Is it the literal end for cryptocurrencies? One should probably default heavily toward the “No” answer on that question. Given that notion, the time is now for assembling the shopping list.

One new theme that has entered the picture is the issue of investors favoring a crypto regime that aligns itself with the climate change agenda. More specifically, the crypto future is probably built by operations that target zero carbon emissions in mining, and eventually, in transactions.

This has been most notably advanced as a defining concept in the space by Elon Musk’s sudden about-face on Bitcoin acceptance for Tesla cars on Wednesday afternoon of last week.

The crypto space is best conceived of as a commodity market, which pits an ultimate barrier to price destruction at all-in production costs.

Given that a new crypto operation would have large fixed costs to surmount before operating costs even begin to come into the equation, and the most efficient operations are already at roughly $20-25k per coin, a base-line expectation of a downside boundary to Bitcoin prices could be estimated in the $25-30k area for new projects, according to our research.

That suggests already established operations that have embedded efficiency and consider sustainability as a core mission objective could represent value targets near current prices.

With that in mind, we take a look at some of the more interesting plays in the space, including: Coinbase Global Inc (NASDAQ: COIN), Riot Blockchain Inc (NASDAQ: RIOT), ISW Holdings (OTC US: ISWH), and Marathon Patent Group Inc (NASDAQ: MARA).


Coinbase Global Inc (NASDAQ: COIN) trumpets itself as a company building the crypto-economy – a more fair, accessible, efficient, and transparent financial system enabled by crypto.

Coinbase started in 2012 with the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin. Today, Coinbase offers a trusted and easy-to-use platform for accessing the broader crypto-economy.

Coinbase Global Inc (NASDAQ: COIN) most recently announced the pricing of $1.25 billion aggregate principal amount of Convertible Senior Notes due 2026 in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended.

According to its release, Coinbase also granted the initial purchasers of the notes a 30-day option to purchase up to an additional $187.5 million principal amount of notes, solely to cover over-allotments. The sale of the notes to the initial purchasers is expected to settle on May 21, 2021, subject to customary closing conditions, and is expected to result in approximately $1.22 billion (or approximately $1.40 billion if the initial purchasers exercise their option to purchase additional notes in full) in net proceeds to Coinbase after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by Coinbase.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action COIN shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -13% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -23%.

Coinbase Global Inc (NASDAQ: COIN) pulled in sales of $1.8B in its last reported quarterly financials, representing top line growth of 844.8%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($0 against $0, respectively).


Riot Blockchain Inc (NASDAQ: RIOT) has become one of the most recognizable stocks in the crypto space, but shares have been sliding sharply of late. The company 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 reported financial results as of and for the three-months ended March 31, 2021, including an Increase in mining revenue by 881.1% to $23.2 million for the three-month period ended March 31, 2021, as compared to $2.4 million for the same three-month period in 2020 and an increase in mining revenue margin to 67.5% for the three-month period ended March 31, 2021, as compared to 40.4% for the same three-month period in 2020.

“We are extremely pleased with Riot’s record quarterly financial results, which builds upon a transformative 2020,” said Jason Les, Riot’s CEO. “The Company’s improved financial results are a direct result of Riot’s absolute focus on Bitcoin mining and growing its mining operations. With the signing of the definitive agreement to acquire Whinstone US, the Company’s financial and operational prospects are very exciting. We plan to amplify our focus on initiatives that will drive continued growth for the Company, increasing the US-based share of the Bitcoin mining landscape.”

The stock has suffered a bit of late, with shares of RIOT taking a hit in recent action, down about -12% over the past week.

Riot Blockchain Inc (NASDAQ: RIOT) managed to rope in revenues totaling $23.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 872.2%, 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 ($275.6M against $7.4M).


ISW Holdings (OTCMKTS: ISWH) is an interesting new name in the space. The company ramped up its crypto operations last summer with its partnership with Bit5ive LLC, designing and assembling 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 (OTCMKTS: ISWH) announced this morning that it will begin hashing this week with its POD5IVE mining pods at the Bit5ive LLC cryptocurrency mining project based in Pennsylvania. “We started down this road about a year ago, and it has been quite a remarkable journey to make it to this very exciting moment,” commented Alonzo Pierce, President and Chairman of ISW Holdings. “Our analysis shows we can turn a clear profit with Bitcoin pricing above the low $20k’s. So, even with the recent correction, we will start monetizing our investment with a comfortable cushion of profitability on operations.”

This was covered, along with a number of interesting topics, in a recent episode of the Waypoint Podcast, which featured Robert Callazo of Bit5ive and Mr. Pierce from ISW Holdings. The podcast can be found HERE.

Pierce added, “In short, we are launching active mining operations this week. We have strong tech, good partners, a high hash rate, an industry leading PUE, a zero carbon footprint target, and a pooled mining strategy that leverages top industry relationships established by our partner, Bit5ive. We look forward to updating all of this again very soon.”

ISW Holdings (OTCMKTS: ISWH) has reduced outstanding shares by nearly 25% and eliminated over $3.4 million (or 94%) of outstanding convertible debt in recent months. 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. It has also shown topline and bottom-line growth over recent quarters from its Telehealth and Home Healthcare division.


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 announced that it has appointed Georges Antoun and Jay Leupp to its board of directors, effective immediately, as Peter Benz transitions to become the company’s vice president of corporate development and Michael Berg steps down from his position of director to pursue other projects. As a result, Marathon’s board of directors now consists of five directors, including three independent directors and two inside directors.

“As our mining operations trend toward scaling to 10.37 EH/s by early next year, we are continuing to amplify our team to ensure Marathon retains its leading position as one of the largest and most forward-thinking Bitcoin miners in North America,” said Fred Thiel, Marathon’s CEO. “With Georges and Jay joining our board and Peter now leading our corporate development, we believe we are in a much stronger position to grow and raise the bar for the rest of our industry.

The stock has suffered a bit of late, with shares of MARA taking a hit in recent action, down about -9% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -35%.

Marathon Patent Group Inc (NASDAQ: MARA) generated sales of $9.2M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 246.2% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($504.5M against $2.9M).


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