More on Bitcoin USD: MSTX: Take The Risk, Make The Gains 3 Things I Think I Think - Bitcoin, Bitcoin, Bitcoin With Bitcoin Topping $90,000, Beware Of Crypto Copycats Like Dogecoin And MicroStrategy SA Sentiment: Should the U.S. create a Strategic Bitcoin Reserve? MicroStrategy's bitcoin-buying plan praised by BTIG amid crypto bull run

2024-11-21 17:17

More on Steakholder Foods Steakholder Foods Ltd. (STKH) Q2 2024 Earnings Call Transcript Steakholder Foods takes strategic steps in the alternative protein sector Steakholder Foods signs commercial sales agreement with Bondor Foods Financial information for Steakholder Foods

2024-11-21 16:10

Summary Canaan's Q3 earnings report beat analyst expectations for top line revenue but missed on EPADS. The company grew compute power sold by 92% year over and improved rate by 12%. Canaan's Avalon Nano 3 machine could conceivably generate increased interest from home miners if the psychological level of $100k BTC is breached. We are not yet in the 'gold rush' phase of the market judging by current Nano 3 prices, but BTC leads CAN stock higher if history is a guide. When I l ast covered Canaan Inc ( CAN ) for Seeking Alpha in March of this year, I rated the stock a 'hold' and noted the company's high cash burn and reliance on shareholder dilution for funding operations. The latter of which is certainly not unique to Canaan and is generally standard operating procedure among public Bitcoin ( BTC-USD ) mining companies. In this update, we'll look at Canaan's recently reported Q3 earnings report and assess if any further boost can reasonably be expected in the stock now that Bitcoin is seemingly surging toward a six-figure dollar denominated coin price. What Canaan Does To briefly recap Canaan's business; the company derives most of its revenue from selling Bitcoin mining machines. The company's primary product line is the AvalonMiner machine - the most recent of which is the A15 series: Canaan Q3 Deck Subsequent to the end of September, Canaan has announced sales of its A15 series machines to publicly traded Bitcoin miners HIVE Digital Technologies ( HIVE ) and CleanSpark ( CLSK ). The company also offers a consumer-focused miner via the Avalon Nano 3 machine. We'll get into that product a bit more shortly. In addition to selling machines to both consumers and major mining businesses in the industry, Canaan also has a self-mining operation that has typically generated between 10-20% of the company's quarterly revenue over the last two years. Canaan's Q3 Earnings For the quarter ended September 2024, Canaan reported $73.6 million in total revenue with $64.5 million in products revenue and just under $9 million in self-mining revenue. The company beat estimates on the top line but missed expectations on EPADS of -$0.27. Canaan While the company managed to reduce COGS year over year by 7% from $102.4 million to $95.1 million, Canaan still reported a gross loss of $21.5 million in Q3. Canaan Quarterly opex came in at $35.3 million which made the total loss from operations $56.8 million; this was actually an improvement from the $112.8 million operating loss in the period from the prior year but a larger operating loss sequentially. Breaking the company's figures down a bit more, Canaan grew computing power sold year over year by 92%: Canaan The average selling price of that compute was $8.8 TH/s, which was up 12% year over year. Something I find interesting from that slide is the Nano 3 sales and revenue from those sales. At $1.4 million for 10,000 units, the Nano 3 generated roughly $140 per unit sold for Canaan last quarter. Canaan I actually think this is a fairly interesting product because it's marketed toward the general public rather than professional miners. When Bitcoin inevitably eclipses six figures, machines like this Nano 3 could conceivably be profitable as in-home miners if energy expenses are low enough. That said, the most realistic scenario is these types of home mining machines will fail to generate a positive return after all-in energy and machine purchase costs. But judging from the company's website, it appears as though December Nano 3 shipments are being sold a discount. This is not what I'd expect to be seeing with Bitcoin's price nearing $100k. So where is "digital gold" fever? In a 'gold rush' there is certainly logic to being in the picks and shovels business. When digging for "digital gold," the shovels are computer chips. During the last cycle, the price of CAN exploded from under $2 per share in October 2020 up over $39 by March of 2021: Data by YCharts What's telling to me from the chart above is the fact that it took the price of BTC rocketing over $30k per coin for CAN stock to enter a mania. This cycle, we have a Bitcoin price that is quickly closing in on $100k per coin yet CAN is still close to its nominal share price lows from August. The chart below is similar to a chart I shared in my last CAN piece: Data by YCharts Canaan had negative net income in 2020 and deeply negative net income in 2019 - thus, the depressed share price at that time shouldn't be all that surprising. But I think the story that this chart really conveys is pretty simple: Bitcoin led CAN stock and CAN stock led CAN's quarterly revenue. There is certainly no rule that says this has to happen again. But I actually don't dislike the stock down here if we do indeed get a six figure BTC price. Balance Sheet Considerations Like many other Bitcoin mining stocks, operations are generally subsidized by shareholder dilution. This has certainly been the case for Canaan as well. The company continues to raise capital through preferred share sales and even announced another $30 million of securities sales the same day it released Q3 earnings. This latest preferred offering comes after Canaan closed the third tranche of additional preferred shares for $50 million less than a month prior. Canaan At the end of Q3, Canaan had $71.8 million in cash and $138.2 million in prepayments and other current assets. There was $186.3 million in total liabilities - 81% of which were current with $77 million of that being convertible preferred shares. Canaan The company does have a fairly large BTC stack at 1,212 million coins. That hoard has a market value of $114 million at a $94k BTC price per coin. However, 730 million of those coins are not directly held and thus introduce counter party risk into the equation. Closing Thoughts If we think about this through the perspective of the market, six figure Bitcoin is going to probably generate headlines in the broad media landscape. Those headlines may trigger a renewed interest in the cryptocurrency market from the larger public. Higher BTC prices inevitably make the economics of mining more viable. And mining profitability generally strengthens the incentive to mine whether the 'gold' is physical or digital. The point is, as long as Michael Saylor's ' infinite money glitch ' positive feedback loop keeps pushing BTC prices higher, I think there is a realistic scenario where CAN shares can have a run again provided the market starts sniffing out increased machine sales before the revenue is disclosed in Canaan's earnings. But to be clear, I don't think this company is a great long term investment by any stretch. But as a speculative swing trade with $100k BTC as a primary catalyst, it might be worth a shot at $1.70 per share. I have a small position in CAN that I expect to hold for the next few months. I do not anticipate the share price will get remotely close to revisiting previous cycle highs. I'll reiterate the 'hold' call.

2024-11-21 15:30

More on Genius Group Genius Group stock tumbles after H1 prelim results Genius purchases 110 bitcoins for $10M Historical earnings data for Genius Group Financial information for Genius Group

2024-11-21 15:10

Summary MSTX, a leveraged ETF tied to MicroStrategy and Bitcoin, offers high potential returns but carries significant risk due to leverage and BTC volatility. Trump's pro-crypto stance and Bernstein's $200k BTC forecast support a bullish outlook for MSTX, despite inherent risks. MSTX's leveraged returns align with its goal, but volatility decay and non-diversification elevate risks, making it suitable for momentum traders. Despite high potential returns, MSTX is a momentum play, not a long-term hold, with the future of BTC being the key driver. It's been a while since I covered leveraged ETFs, so I'm back with an analysis of the Defiance Daily Target 2X Long MSTR ETF ( MSTX ), which is leveraged to its underlying security, MicroStrategy Incorporated ( MSTR ). As most investors are now aware, a major aspect of MSTR's growth strategy is its Bitcoin ( BTC-USD ) holding. With BTC rallying on the back of Trump 2.0 and now at dizzying highs that threaten to rapidly breach the $100k per BTC level, every single ETF associated with this crypto, as well as several others, has seen a fortnight-long rally that seems to have plenty of steam to keep moving up. Greed often brings danger and risk, and this is probably one of the most dangerous and risky scenarios there is in the world of investing today. BTC longs are having their day/week/fortnight/etc., and investor expectations around the future of cryptocurrencies have, for all intents and purposes, gotten far ahead of themselves. Ironically, though, that impetus is far from being fully priced in. When you look at it from that angle, a leveraged play like MSTX sounds exciting because it comes with the chance to create wealth overnight. It's almost reminiscent of the 'accidental millionaire' stories of investors who bought BTC at ridiculously low prices. That being said, however, this is when investors need to be most cautious. Although the signs are all largely positive around decentralized currencies, there are several other factors to consider at this macro level. Let's break it down in the context of investing in MSTX, which I would definitely not suggest at this time unless you're a momentum trader who knows their technicals. How Does MSTX Work to Provide 2x Leverage? MSTX achieves leverage by entering into swap agreements and trading options. These swaps are backed by collateral in the form of treasuries, bond ETFs (short-term), money market funds, corporate debt, and any combination thereof. The strategy also involves shorting the stock when it's headed downward, but as of November 19 , the fund mostly holds long swaps dated September and October 2025. On the options side, the fund holds short-term calls at strikes between $200 and $235. The fund also holds about 7.5% of its total assets in MSTR stock. The leveraged returns thus far have been in line with the fund's goal of achieving a daily 2x return on the underlying, as can be seen from this since-inception chart. Please note that the fund was launched in the middle of August this year. SA So the leveraged approach has clearly worked here, but I also posit that this has largely been the result of a largely predictable appreciation in BTC value since president-elect Trump was voted into office. It's also obvious that any weakness in BTC prices becomes more pronounced in MSTX's performance due to the leverage effect, and that's what I'd like to discuss next. Leverage Risks Leverage on an investment position is always subject to additional risk, but in the case of a leveraged ETF, there are even more risks piled on top. For instance, volatility decay is amplified in such an ETF because of the daily reset. In other words, if you hold such an ETF for any period greater than a single trading day, the daily rebalancing of assets to maintain the 2x leverage can have a significant detrimental effect - particularly if the movement on down days exceeds the movement on up days. And this is true even if the overall movement of the underlying security is positive. That's one of the biggest risks here, and the risk is so impactful that the SEC and FINRA have warned investors for years about it. Here's an extract from a more recent warning: ...because most leveraged and inverse ETFs reset each day, their performance can quickly diverge from the performance of the underlying index or benchmark. In other words, it is possible that you could suffer significant losses even if the long-term performance of the index showed a gain. The warning uses the terms 'index' and 'benchmark' because leveraged ETFs typically use an underlying index as the benchmark against which to compare returns. In the case of MSTX, however, the risk is further elevated because the underlying security is a single stock, not a basket of stocks that can often help absorb some amount of selling pressure. Invest in MSTX or No? That's the real question we're trying to answer here, but that answer isn't as straightforward as it might seem. Although MSTX has managed to achieve a price return of 464% since inception, there's absolutely no guarantee that it will appreciate further. In fact, one single day of BTC price reversal could wipe out a significant chunk of your gains on this ETF. The added risk here is the performance of MSTR itself. Since the fund is leveraged to this single stock, there's also the risk of non-diversification to think about and account for. In essence, you're literally doubling down on your core MSTR investment with this ETF. Of course, you don't really need to own MSTR to own MSTX, but that's where your gains are truly maximized. Owning both securities not only gives you the 2x leverage, but also the base gains from MSTR's positive price action. Moreover, it can help absorb some of the losses incurred with the ETF on BTC down days. In order to definitively address the investment dilemma, the real question we need to ask ourselves is whether or not we think there's much more of a runway for BTC prices in the near term. In order to determine this, let's look at the various catalysts that support a bullish BTC view. President-elect Trump is now pro-crypto This is probably the most bullish catalyst right now. Trump is unequivocally a 'converted' supporter of cryptocurrencies, and Fortune this week reported a phone call between the 47th President(-elect) of the United States and the CEO and founder of Coinbase, Brian Armstrong. I'm posting an extended extract because several points from that report are relevant to a bullish MSTX thesis (emphasis mine): This newfound influence was reflected in a phone call this week between President-elect Donald Trump to Brian Armstrong, founder and CEO of Coinbase. Armstrong and his company poured nearly $50 million into supporting pro-crypto candidates, whose ranks now include Trump , a onetime Bitcoin skeptic who became a full-on convert to digital currency earlier this year. In recent months, Trump has floated ideas like a crypto advisory council and a strategic reserve for Bitcoin. He also counts a number of longtime crypto boosters in his inner circle, including Elon Musk and the CEO of Cantor Fitzgerald, Howard Lutnick , whose firm helps manage the reserves of stablecoin giant Tether and who on Tuesday was tapped to be Commerce Secretary. A person familiar with the call, who spoke on the condition of anonymity, said Armstrong and Trump did not discuss specific appointments but instead spoke about crypto on a broader level. Coinbase declined to comment on the call. The Wall Street Journal reported on Monday that the two would meet . There have also been unconfirmed reports on X that another prominent crypto CEO, Ripple’s Brad Garlinghouse, has had direct access to the President-elect. A Ripple spokesperson told Fortune the company does not discuss private conversations. There's some conjecture here, naturally, but all signs point to the fact that cryptocurrencies have the broad support of the Trump administration, which bodes well for MSTX over the next four years at a minimum. Bernstein predicts $200k BTC in 2025 Brokerage firm Bernstein issued a forecast back in June that saw a $200,000 price target for BTC-USD in the next year. That potentially gives it a +100% upside from its current price of over $92k (as of this writing), which might look optimistic but is nevertheless in line with the bullish sentiment around crypto in general and BTC in particular. Bernstein via The Block That's a fairly confident claim that projects $1 million BTC over the next decade. Bernstein analysts Gautam Chhugani and Mahika Sapra, in a note to clients at the time, said this: We believe that the U.S regulated ETFs were the watershed moment for crypto that brought in structural demand from traditional pools of capital,” the analysts wrote. “Around $15 billion of net new flows have been brought in by the ETFs combined. We expect Bitcoin ETFs to be equivalent to ~7% of bitcoin in circulation by 2025 and ~15% of bitcoin supply by 2033. Crowdsourced Projections on Binance are more conservative but still very bullish Binance has a forecasting tool on its website that allows visitors to input their estimates of growth rates for BTC price over the next several years. Interestingly, these numbers are much more conservative than those of professional analysts and show a 2030 estimate of $122,985.97 based on growth estimates from users. Now, crowdsourcing predictions and projections is not a new phenomenon. Indeed, here's a nugget that dates back to the early 20th century: The classic wisdom-of-the-crowds finding involves point estimation of a continuous quantity. At a 1906 country fair in Plymouth , 800 people participated in a contest to estimate the weight of a slaughtered and dressed ox. Statistician Francis Galton observed that the median guess, 1207 pounds, was accurate within 1% of the true weight of 1198 pounds. [6] This has contributed to the insight in cognitive science that a crowd's individual judgments can be modeled as a probability distribution of responses with the median centered near the true value of the quantity to be estimated. [7] Further evidence supporting the accuracy of crowdsourced predictions comes from a decade ago, when the office of the U.S. Director of National Intelligence sponsored a 3000-participant study called the Good Judgement Project . To cut to the chase, here's what they found (emphasis mine): The group has tackled 250 questions in the experiment so far. None of them have been simple; current questions include whether Turkey will get a new constitution and whether the U.S. and the E.U. will reach a trade deal. But the group consistently got answers right more often than individual experts , just through some simple online research and, in some cases, discussions with each other. The crowdsourced predictions are even reportedly more accurate than those from intelligence agents . One report says that when “superpredictors,” the people who are right most often, are grouped together in teams, they can outperform agents with classified information by as much as 30% . So we now have experts predicting $200k BTC and the "wisdom of crowds" projecting $123k BTC by 2025, presumably marked by the end of the calendar year. This actually answers the question we asked in the subheading - should you or should you not invest in MSTX? By definition, since MSTX is an indirect reflection of BTC performance, the consensus all around appears to be decidedly bullish, with upside potential from the current price being between 33% and 116%. The crowds have spoken, and the president-elect appears to have put his stamp of approval on the whole thing. MSTX, therefore, has a Buy recommendation from me. The Downside and The Takeaway There's obviously a ton of risks associated with this stellar potential return on your investment. That return, leveraged 2x based on MSTX's recent historical price return, implies a lower-end upside potential of 66%. So, what balances out that reward? The biggest risk I see is a systemic failure to support the growth of cryptocurrencies, and of all the catalysts on the horizon, the president-elect's political agenda is logically going to be the biggest driver of BTC - either up or down. Judging by the developments I've covered, it seems like a marginal risk at this point, but you never know. Overall, I'd say the future is extremely bright for BTC and, thereby, MSTR and, thereby, MSTX. I call a Strong Buy, but with a caveat that this is purely a momentum play and not a long-term holding by any measure. That momentum is currently very strong, so it makes sense to increase your risk exposure a little and try to make significant gains while it lasts.

2024-11-21 13:04

Summary There’s absolutely nothing wrong with buying Bitcoin and it’s worked out beautifully so far for MicroStrategy, but Bitcoin is not cash. Bitcoin can be a rational investment, especially as a hedge in unstable economies, but its necessity for US investors is debatable. MicroStrategy's Bitcoin-driven strategy is either a financial masterstroke or recklessly risky, with its success hinging on BTC's continued price rise. Here is one thing I think I am thinking about three times. 1) The money supply as the cost of capital. In a recent interview, MicroStrategy CEO Michael Saylor was criticizing Warren Buffett's cash management. Buffett has a colossal cash hoard of $325B sitting in T-Bills earning 4.5%. Saylor, on the other hand, invests his cash in Bitcoin ( BTC-USD ). He justifies this "cash management" by arguing that his "cost of capital" is 15%. Saylor makes this claim by arguing that the money supply is increasing by 15% and that that is essentially the real cost of future money. Oh boy. Where do we even start with that? I hesitate to criticize Saylor because this bet has worked out brilliantly so far, but that doesn't change the way economics and finance works. First, I have to defend Buffett for obvious reasons. Warren Buffett is the greater capital allocator in human history. The essence of Berkshire Hathaway is that it's a cash flow monster that he has masterfully allocated across time. Cash management isn't just something he's good at. It's why he is who he is. And a crucial element of that is in understanding that he allocates his cash in productive entities, while leaving roughly 10% of his capital in a liquid form to be deployed when needed. There's absolutely nothing wrong with buying Bitcoin, and it's worked out beautifully so far for MSTR, but Bitcoin is not cash. In fact, Bitcoin increasingly looks like a levered form of QQQ. And the whole point of owning something like TBills is that they can be deployed when things like QQQ become discounted. If BTC were to crater for some reason MSTR would not be able to lean into this "cash" holding and in fact, there's a very real chance that the internal leverage could result in them becoming forced sellers of BTC. It's not just dissimilar to what Buffett is doing with TBills. It's almost the opposite of the way Buffett thinks about dry powder. And in fact, Saylor is funding his BTC purchases…wait for it, by selling bonds to obtain fiat. The difference between him and Buffett is that he isn't using organic cash flows to fund the asset purchases and is instead getting his fiat from lenders. Second, the money supply isn't inflation. That's like saying that calories are fat. Sure, if you eat too many calories and don't put your calories to good use by being active then you will get fat. Similarly, if we just printed off money and didn't do anything productive with it then that money would just lead to inflation. But that's not what actually happens. Money creation very often (not always) leads to productive uses that create real resources and are therefore deflationary in many cases or inflation neutral. That's why economists specifically measure inflation based on the change in prices of a basket of consumer goods. You can't just say "NVIDIA borrowed $100M from JPMorgan; therefore inflation will go up". No, NVIDIA is very likely creating money and then using it in a manner that will be accretive to earnings and generate real resources that are inflation neutral in the long run. Of course, it's also true that government spending is often inflationary. We experienced very high inflation during Covid, in large part due to government spending. But even then, the 15% assumption is wildly overstated. Don't get me wrong. There are lots of smart reasons to own something like Bitcoin, and I am not some anti-coiner type. But sometimes the narratives are a bit much. 2) TradFi's inability to adopt Bitcoin I guess I am what Bitcoin Maximalists might call a "traditional finance" (tradfi) guy. I've long stated that there are perfectly rational reasons to own Bitcoin. I believe this is especially true if you live in a 3rd world economy where the probability of currency collapse is even moderately high. I believe the story is more complex for US investors, where the Dollar is so stable. When it comes to practical money management, it's an asset you might want, but don't necessarily need. I think most people in tradfi think of Bitcoin somewhat similarly. I've mentioned this in the past, but Bitcoin falls into the Defined Duration model as a form of insurance. It's a super long duration instrument that exhibits huge asymmetric upside at times and gives you an insurance hedge against fiat currency. The question someone has to ask themselves about an asset like this is: a) Do I need insurance of this type? b) If yes, then how much? These are super personal questions and in the case of a US investor I'd argue the use case isn't nearly as compelling as the use case for someone in, say, Argentina. When you think of it as a form of insurance there's nothing within traditional finance that says this is wrong. In fact, traditional finance mastered the art of selling insurance to people. But there's nothing wrong with a traditional finance portfolio holding something like Bitcoin. I just think you have to compartmentalize it properly and thinking of it as insurance has helped me understand the use cases without getting caught up in all the competing narratives about it (or worse, dismissing it entirely). 3) The world's best (or worst) investment bank. Speaking of MicroStrategy ( MSTR ) - I can't stop loving this story. I've said this for a year now, but it's either the greatest thing to ever happen in finance or it's the most reckless thing to ever happen in finance. I have no idea, but there's really no in between in my view. To some degree, it's all very ponzi-like. MSTR is selling bonds to fund purchases of BTC, and those purchases help drive the price of BTC up, which allows MSTR to finance more bonds. It's magnificently brilliant as long as the price of BTC keeps going up. As long as it keeps going up. I've joked that MSTR has turned into the world's most successful investment bank, except instead of helping finance capital formation, they're just financing number go up. And look, it's worked brilliantly so far. Saylor is winning. In fact, you could argue he's won. He could walk away right now and say, "I won all finance forever and ever". MSTR is up 3,000% in the last 5 years. This kinda makes you wonder - if Saylor is right that the cost of capital is 15% per year, then MSTR has generated about 24 years' worth of returns in just the last 5 years. When do you step back and say, "I won"? Or do you? Can you? I don't know the right answer. I'm just a boring old traditional finance guy. But me personally - I'd be really tempted to pack up my bags, declare victory and go buy… anything I wanted. Original Post Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

2024-11-21 12:50

More on crypto Bitcoin scales another all-time high in wake of IBIT options debut Bitcoin's Passing The Baton To Altcoins MicroStrategy's bitcoin-buying plan praised by BTIG amid crypto bull run MARA Holdings: If You Can't Beat Hyperscalers, Partner With Them Trump's Pre-Election Crypto Promises Could Spur Bitcoin To A Multi-Trillion Asset

2024-11-21 12:35

More on MicroStrategy MicroStrategy Could Be A Multi-Trillion Dollar Company MicroStrategy C Corp Means Double Taxation: $107 NAV Is Price Target MicroStrategy: Overvaluation Gets Dangerous (Rating Downgrade) MicroStrategy prices upsized offering of $2.6B convertible debt MicroStrategy announces private offering of $1.75B of convertible senior notes

2024-11-20 23:53

More on Bitcoin USD, Ethereum USD, etc. With Bitcoin Topping $90,000, Beware Of Crypto Copycats Like Dogecoin And MicroStrategy Trump's Pre-Election Crypto Promises Could Spur Bitcoin To A Multi-Trillion Asset Bitcoin's Passing The Baton To Altcoins Bitcoin scales another all-time high in wake of IBIT options debut Bitcoin hits all-time high as it surpasses $93,800

2024-11-20 21:07