Bitcoin Mining Stocks – Time To Give Up And Move On?

Bitcoin Mining Stocks – Time To Give Up And Move On?

is it time to sell Bitcoin mining stocks I know a lot of you might be shocked to even hear those words uttered out of my mouth because I’ve been beating the drum on owning Bitcoin mining stocks since the end of 2022 and it has treated us very very well however the reason I’m even considering the possibility that it might be time to sell these companies is well it’s because Bitcoin is now down more than 20% from its all-time highs of $73,000 today bitcoin’s only trading at $59,000 I don’t say only lightly I realize it’s up significantly from the $20,000 per Bitcoin that it was at just not long ago just months ago but this really only tells you half the story where if I pull up this chart here you can see the the average Bitcoin mining stock year to date is down down 33% while Bitcoin itself is up basically 50% if you didn’t put all of your eggs into one basket into a company called clean spark which fortunately is what I did you have felt immense pain year to date outside of clean Sparkle a lot of these companies are down 20 30 40 or 50% plus year-to date that is immense pain and that’s not a favorable dichotomy between the the performance of these Bitcoin mining stocks and Bitcoin itself in fact that is terrible performance that is the exact opposite of what you expect when you invest into these companies if you invest into these stocks you would expect if Bitcoin goes up 50% you would expect your Holdings to go up 150% if not 200% or more so this is not a good scenario that’s been unfolding here for Bitcoin mining stock investors now one thing that I think everybody needs to realize is that right now the way the way things are right now and this can always change but right now Bitcoin mining is not a good business model you have to spend millions of dollars if not tens of millions if not hundreds of millions of dollars upfront to even be somewhat relevant and then to stay relevant you have to keep spending Millions tens of millions or hundreds of millions of dollars again just to stay relevant it’s a NeverEnding arms race and guess where that money comes from well it comes from shareholders via delution from the companies that hold on to their Bitcoin or it comes from companies selling their Bitcoin just to grow more so that they can sell more Bitcoin to grow even bigger it’s a NeverEnding cycle for these companies and you know I give the creator of Bitcoin a lot of credit with this that’s the way it was intended to be and it’s actually a very healthy thing but for investors in the public space are these companies good Investments well right now based on hash price mining Bitcoin is the least profitable it has ever been again that can change very quickly but that is a fact it is the least profitable that it has ever been it is also the most heavily diluted industry in the entire world in the entire stock market there’s no other industry that has this amount of shareholder dilution and again if the companies choose not to dude as much and they sell their Bitcoin as a result of that well that means that they miss out on the potential upside of Bitcoin that you would receive if you hold on to your Bitcoin now a time period like this isn’t as rare as people think I’ve been a part of this space for four plus years now it’s crazy to think but there have been numerous time periods in the past where Bitcoin mining stocks significantly underperform Bitcoin itself and eventually it always corrects itself and I think that’s because it’s kind of a self-fulfilling prophecy if investors believe that they can get leverage return to bitcoin by owning these stocks they will get leverage returns because everybody is buying them in hopes of getting leverage returns so those leverage Returns come from all the buying pressure it’s a self-fulfilling prophecy could that change absolutely and it seems like every time a time period like this comes around there’s more and more Skeptics that enter this industry and say woo Bitcoin mining stocks they’re way overvalued what are we thinking here and you know this is kind of the problem with investing into Bitcoin mining stocks it’s that depending on what your future price for Bitcoin is the investment opportunity here can change dramatically you can have two different groups of people that completely disagree and come up with completely different conclusions and they could both be equally right what I mean by that is if you believe Bitcoin is going to a million by 2030 like I believe then owning any of these companies listed on this chart here will prove to be a great investment long term no matter who says it’s overvalued today they are clearly undervalued if Bitcoin goes to million the problem is there’s no guarantee of that happening and based on the other group’s opinion that thinks Bitcoin is going to stagnate here going to stay below $100,000 per Bitcoin for the next decade or even go back to to $10,000 per Bitcoin well they could be right as well if Bitcoin does what they think it will they could be absolutely right in saying these companies are massively overvalued rather than the other group that says they’re massively undervalued based on what you believe Bitcoin will do that is a huge problem with this industry and analysts get this wrong every single year based on their input for the future price of Bitcoin they could project that a company’s going to grow their revenues by 100% next year in 2025 if Bitcoin doesn’t go up to their target their revenues could actually get crushed 50% next year in 2025 this is why it’s so hard to Value these companies and put up a proper value on them the volatility of Bitcoin itself the relatively young nature of Bitcoin and and and how far it is up the scurve it’s not very far this is a young new technology there is lots of unknown which makes the investment opportunity interesting at a minimum but if that unknown doesn’t go our way then we could feel a lot of pain and we could waste a decade of Our Lives if Bitcoin doesn’t go up and I do think that’s just a mental hurt that investors have to get through they have to get over it that when you invest in Bitcoin mining stocks you’re not really investing sure anything you put your money into with hopes of making more money on your investment that’s an investment opportunity but what you’re doing in this space is actually speculating now there’s a big difference between speculating and gambling speculating you like your odds better because you’ve done the research you understand it better whereas gambling there’s always less than a % odd of you winning that gamble speculation can be much more lucrative right but it’s still extremely risky so why does investing in these companies even interest you why does it interest me I guess is what I should say what I how I should phrase it well it’s because of the potential return you could see in these companies it’s very similar to the gold mining stocks themselves where these companies go from very very very very cheap undervalued and too cheap to very very very very pricey and very very very very overvalued that can happen in the snap of the fingers and that is volatility and that is beta that you cannot find anywhere else in the market again though you’re speculating you’re you’re speculating on a company that is speculating on the price of Bitcoin so that added dimension of risk is why Bitcoin mining stocks will always be leveraged plays to bitcoin I don’t care what this shows us what this tells us over the short term these companies will always be leveraged plays to bitcoin because of that fact now let me explain to you the other problem the other problem with valuing these companies investors don’t realize that although the business model really sucks it’s not an attractive business model just like a gold mining company doesn’t have an attractive business model it doesn’t matter and investors don’t realize that but it’s a mental Hur you have to get through what matters is actually risk appetite of the overall investor what matters is the amount of liquidity in the system what matters is the amount of fear and greed amongst investors in this space don’t believe me look at the chairman of cleanspark the company I own and I’m not just picking on Matthew Schultz here every executive team in this space does this what is he doing he tweets out about Jerome Powell gaining confidence to cut will take long longer than thought and how that is dubish a cut is not a hike and the market was prepped for the worst the executive chairman of one of the largest Bitcoin mining companies in the world is fully concerned with market dynamics the amount of liquidity in the system interest rates and the amount of fear and greed amongst investors because he knows that those three variables matter much more to his stock price performance than his actual business operations do now don’t get me wrong don’t hear what I’m not saying the reason cleanspark has outperformed every other minor is because they went from a company that was doubted by everybody everybody doubted they could succeed everybody doubted they could execute everybody doubted they could grow and they’ve done the opposite they have proven they can grow they’ve proven they can execute and they’ve proven they can do things the right way and their operations are better than everybody else’s operations and in my opinion based on my research it’s really not even close so do operations matter to a certain degree absolutely they do but the major variables here are what I just discussed fear and greed amongst investors risk appetite amongst investors and also the amount of liquidity in the system it just so happens that as bull markets mature investors start to look for even more return ah 6% in the S&P 500 not good enough can I get 10% somewhere in every single bull cycle this is just the way it works investors choose to take on more and more risk as the bull market matures and this inevitably leads to investors becoming overleveraged taking more risk than they should and they then they get flushed out of the system we saw it happen in 2022 that will happen again so I actually think when people try to use historical valuation methodology for these companies they’re wrong in doing so because based on their inputs I don’t care I don’t care based on your inputs it can give you two different answers and each answer could be just as likely to happen based on the price of Bitcoin alone which is extremely volatile what I like to do and what I’ve started to do and I’ve I I started tracking this a long time ago I’ve just recently started to pay more attention to it because it makes more and more sense in my head what I’ve started to do is actually track the amount of risk appetite amongst investors track the amount of greed and fear in this space and I’ll show you what I mean I’ll bring up the actual Excel spreadsheet here in a little bit but what this chart shows you is the amount of fear and greed as well as the risk appetite amongst investors in the Bitcoin mining space currently for you to really understand what I’m showing you here on the screen you have to understand my formula and and how I came up with these numbers what I’ve done is I’ve taken the 14 largest publicly traded Bitcoin mining stocks I’ve added together their total market cap so each individual market cap for each individual company I’ve added all of those together came up with a total sum and I’ve divided that by the amount of Bitcoin remaining to be mined and the value of that Bitcoin that’s available to be mined this isn’t pretty because again I’ve only used this for my own purposes I’m going to make this available to all my paid monthly members here after I upload this video if you want to join my membership hit the join button located right next to the Subscribe button or hit my patreon link in the pinned comment I don’t take sponsorships I’m entirely self-funded so your monthly support means a lot to me but this kind of breaks this down for you a little easier the current bitcoin Supply so the amount of Bitcoin in circulation right now is1 19,69 2,737 the remaining Bitcoin Supply so this is the amount of Bitcoin that have yet to be mined but will be mined in the future is only 1,37 and 263 at a current bitcoin price of $59,000 give or take this means that the notional value of the remaining Bitcoin that can be mined is 77.5 billion do essentially which is a lot of money now my other input is again entirely factual sure I still have to make some assumptions but these assumptions are way less variable than the price of Bitcoin is for example I take the current price of Bitcoin the current market caps of these companies and the current amount of the total Bitcoin Network that these companies these publicly traded companies control which is 21% right now 21% of the total Bitcoin mining network is controlled by public companies the other 79% is private entities over time I expect those two to meet more in the middle at 50/50 but these are my inputs the current bitcoin Supply which is factual the remaining Bitcoin Supply which is factual the current bitcoin price which is factual and the total Network controlled by publicly traded companies which is factual so again what I’ve done is I have summed up the market caps of the 14 largest publicly traded Bitcoin mining companies I have taken the 21% Network share and found the value of the remaining Bitcoin going to be mind that they will mine at a current control rate of 21% and I come up with a ratio of 1.06 currently so to simplify this even further I know this is a little complicated I’ll simplify this and make it look more pretty again for the members but what this is telling you is the total sum of the 14 largest publicly traded companies in their market caps is greater than the notional value of the remaining Bitcoin that can be mined so this is a great gauge of the of the sentiment of retail investors and institutional investors when it comes to buying or selling Bitcoin mining stocks because this tells you how many dollars of value the markets are assigning per dollar of the value of the remaining Bitcoin to be mined and what these companies their share of that will be this is actually quite interesting because if you track this back it tells you exactly when you should have been buying these companies and exactly when you should have been selling these companies the historical average or ratio is 75 or 75 5% right now is the yellow bar on this graph we’re at 106% which technically means investors in the public Bitcoin mining space are greedy they’re not fearful they’re certainly not fearful and they’re likely greedy now again what’s important to note is this can change very quickly based on what the current price of Bitcoin is if Bitcoin goes to $80,000 tomorrow which we all know is possible it it randomly does this sort of stuff then this ratio is going to so I don’t like to look at this ratio in this model I guess you could call it every single day because this this can change every single day what I like to do is I like to find the average per month and chart it out and you can see at the end of December December 2022 was the lowest reading 28% the total market cap of these publicly traded companies was only worth 28% of their share of the remaining Bitcoin at that point in time we can track this back by looking at a Bitcoin mining stock ETF which is shows you a basket of these companies and when they were the cheapest when they are the most expensive from a stock price standpoint well if we track this back to December of 2022 this was the low and this feeds directly into my thesis that fear and greed and investor sentiment matter so much more to this space than actual business fundamentals do again don’t get me wrong business fundamentals matter that’s why clean spark is outperformed so tremendously but just for fun let me see what the ratio said for for July of 2023 for July of 2023 we had a reading of 108% meaning investors were more on the greedy side of things and again it ended up being a pretty good time to sell so I just see based on this model that the the low was in October of 2023 when this ratio hit bottomed bottomed at 64% let’s go to October of 2023 for the ETF well I’ll be darned October of 2023 another bottom for these Bitcoin mining stocks and then ever since December of last year the ETF is kind of flatlined I guess it’s down 24% and you’ll actually see a very similar pattern on my model here where in December of 2023 it shows that these companies were overvalued just based on investor sentiment would have been a another good time to sell and we’ve kind of hovered above the average of 75% and again if you look at today which this can change every single day again investors are on the greedy side now I do want to be clear we can look at any model we want uh and no model is perfect there are flaws to this model that I’ve created for myself as well although I will say I like it a lot because the assumptions I make are much more factual they’re less assumptions and more facts if that makes sense that’s why I like it so much and it still gives you a good reading on investor sentiment in this space which again with with small cap companies investor sentiment in Risk appetite of of investors is everything but at the end of the day kind of like I was saying earlier if you believe that Bitcoin is going to a million dollars by 2030 you shouldn’t look at any model I don’t even care if it’s the one I just showed you you should ignore it you should absolutely ignore it because your thesis is that Bitcoin is going to perform greatly and as a result of that any investment you make should perform greatly and that’s regardless of whatever valuation methodology or metric you use right now if Bitcoin goes to a million dollars you’re going to be glad that you were buying Bitcoin mining stocks today when you’re sitting here on May 2nd of 2030 you will be extremely grateful extremely glad you did so even if other people were telling you it was overvalued and I find myself in this Camp I am a Bitcoin believer I’ve been a Bitcoin believer for a very long time if you’re not yet sold on bitcoin I highly encourage you to read the Bitcoin standard it’s a book I have a link to it down in the description down below get your hands on that do yourself a favor however again if if you don’t believe in Bitcoin and after reading that book you just you you still just can’t see it don’t own these companies if you don’t believe in Bitcoin and you could be right that Bitcoin could fail I’m not I’m not oblivious I’m not a perable on bitcoin I’m not oblivious this thing could fail and if it does all these companies will have ended up being way overvalued so suffice us all to say that I think when people try and use traditional valuation methodology for these companies they’re making a big mistake because this is an industry that is unlike any industry we’ve ever seen before we don’t have a benchmark that we can look at and say oh they’re they’re overvalued right now or o they’re undervalued right now other than what these companies have been valued at historically which is exactly what my model tells you what these companies have been valued at historically that’s the only Benchmark we have you can look at current cash flows all day long and say oh these companies they’re not healthy they’re overvalued right now but if Bitcoin succeeds and goes to a million dollars per coin you’re going to regret saying they were overvalued so to answer the question should you sell your Bitcoin mining stocks based on my model yes based on everybody else’s models that have come into the space using traditional method ology yes they’re overvalued you should sell them but based on what bitcoin’s potential is should you sell them probably not if you believe in Bitcoin and that’s just because these these these Bitcoin mining stocks being leveraged plays Will they’ll always be leveraged plays because they’re risky they add another element of risk and it’s a self-fulfilling prophecy if investors believe something they’re going to continue to believe that thing but on the other side would I buy these companies because their business models are good absolutely not absolutely not the business models are terrible right now mining economics are not good right now they’re the worst they’ve ever been historically and that is a fact now one last note I want to put into this video is that yeah you have two different companies companies that dilute to raise their money to grow more which it sucks as investors you have to trust the management team is going to make a a creative Acquisitions a creative growth moves and that doesn’t always happen if that doesn’t happen you suffer as a shareholder and there’s the other group that chooses to to sell their Bitcoin for me the the upside the the floor the floor in valuations for these publicly traded Bitcoin mining companies comes from the potential upside of their hotal balances which is why I’m not a fan of companies that don’t have hotal balances and I’m not a fan of companies that choose to sell their Bitcoin because I think again that beta by owning these companies that potential upside actually comes from the Bitcoin that these companies hold and it seems like I’ve gotten this right too in my thinking with the hotal balances because the two best performing companies which again are my two favorite Bitcoin mining stocks they’re the only two I’ve ever considered owning Cipher Mining and cleanspark they’re the two best performing stocks this year and the only reason for that I think is because they have a hotal balance they’re holding on to their Bitcoin and they are very well-run companies their operations are better than everybody else listed on this sheet here and they are 100% focused on bitcoin they are the only two remaining pure Bitcoin plays all of these other companies have other business segments which I think will cost them in Bull markets but I think it will provide a floor during bare markets another way to put that is I think they will underperform in Bull markets and outperform in during bare markets but if you want the real return I think it comes from cleanspark and I think it comes from Cipher mining because 100% of their energy and effort is put into Bitcoin mining they have a hotal balance they have very little little debt and they’re very well-run companies so for me even though my own model is telling me these companies are overvalued right now I’m not selling them because I believe in Bitcoin long term and I believe that I can capture gains in this industry that you can’t find anywhere else in the market even the gold mining sector because Bitcoin itself has such Better Price appreciation opportunity in front of it than that of of gold with that I’m going to end this video here if you’re new here or returning night yet subscri Please Subscribe down below we have one of the fastest growing stock market YouTube channels out there I’m I’m incredibly blessed I’m thankful every single day that I get to wake up and do what I love uh I’m always like like I said earlier I’m 100% self-funded and I’ll never take a sponsorship um because I want to remain independent and I think you guys value my Independence as well so your monthly support does mean a lot to me with that I hope you have a great rest of your day stay blessed keep 10 toes the grounding your chin up peace out

Bitcoin mining stocks like CLSK, MARA, RIOT, BITF, and others have significantly underperformed Bitcoin (which is up 50% year-to-date). Is it time to rethink this investment?

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