LIFE ON EARTH BITCOIN STEPS TO CRYPTOMONEY
RBL PLATFORMS : BITCOIN ELECTRIC
CAVEAT : FORWARD THINKING STATEMENT : TERMS OF USE : CAVEAT
2021 A.D.E. SINCE TIME BEGAN : salus populi suprema est lex - the right of the people is the supreme law : IN TRUTH WE TRUST 2021 A.D.E.
Published By RC Goodwin Today Jan 8TH
RISK - BENEFIT ANALYSIS : MWE TRIGEN PLATFORMS : STEPS : INTERNATIONAL STANDARDS : ELEVENTH HARMONIC
TEN LOE BITCOINS = $2-B USD ENERGY ASSETS
Most Bitcoin Is Made in China. Competitors Are Chipping Away
Craig Mellow : Jan. 8, 2021 12:44 pm ET : BARRON'S NEWSLETTERS
The Barron's Daily
A morning briefing
on what you need to know in the day ahead, including exclusive commentary from
Barron's and MarketWatch writers.Denys Bozduhan/Dreamstime.com
Bought any Bitcoin lately? Chances
are it was made in China. That could be a problem for the burgeoning digital currency—and
an opportunity for ambitious rival “miners” in the U.S. and elsewhere.
Bitcoin mining is virtual, but
requires expensive real-world inputs. Simply put, miners compete to solve
increasingly complex equations generated by the Bitcoin network. The first
to solve one wins the right to process and confirm new Bitcoin
transactions, and win newly minted coin as recompense. Being first requires
massive computing power, which in turn requires huge amounts of electricity.
Chinese entrepreneurs jumped on this
ecosystem in the early 2010s, while Westerners remained wary. Miners harnessed
nearly-free hydropower near dams that the country had built with abandon.
Beijing-based Bitmain got a lock on the specialized chips and machinery the
miners needed (and is aiming for a blockbuster IPO this year). BTCC and other
exchanges mushroomed to trade the products.
“You have these little cities in
backcountry China where hundreds of millions have been invested,” says Taras
Kulyk, head of blockchain business development at Core Scientific, which
operates three competing mining sites in the U.S.
But Beijing authorities shuttered the
exchanges in 2017, when a flurry of dubious “initial coin offerings” jacked up
Bitcoin’s price sevenfold. A 70% crash followed in 2018. That left Chinese
miners with a two-thirds global market share, but no dependable way to convert
their Bitcoin into renminbi to pay non-virtual bills.
“They are reliant on over-the-counter
brokers who are supposed to be banned but still operate,” says Simon Hawkins, a
co-chair of law firm Latham & Watkins’ global blockchain and cryptocurrency
task force. “The policy attitude is quite unclear.”
That lack of clarity opens a window
for non-Chinese miners, as a near-quadrupling of Bitcoin prices since October promises
fatter profits. Bitcoin topped $40,000 for the first time on Thursday.
Cheap electricity isn’t the only
metric anymore. Investors are also weighing regulatory risk and management quality,
says Michel Rauchs, who follows cryptocurrencies for the Cambridge Centre for
Alternative Finance. “Better-capitalized firms are building out
professionalized data centers,” he says. “China has lost some share,
particularly to the U.S.”
Stockpickers are certainly
enthusiastic about early movers like Marathon Patent Group (ticker: MARA),
which mines in Montana and North Dakota. Its shares have exploded ninefold in
the past two months. Competitor Riot Blockchain (RIOT), out of
upstate New York, is up a mere seven times.
A peek under Bitcoin’s hood might
cool markets’ ardor a bit, says Daniel Doll-Steinberg, co-founder of Frontier
Technology venture capitalist EdenBase. About 18.5 million of the
statutory maximum 21 million bitcoins have already been created. As the
remaining supply dwindles, so does the fraction of a coin earned by each
successful “hash,” or solution. That will ultimately multiply miners’
break-even costs.
That process will take decades,
though, says Whit Gibbs, CEO of HASHR8, which enables retail investors to
contract a bit of their own Bitcoin mining. Meanwhile miners are sucking in
windfall profits from Bitcoin’s boom.
For all that, China’s huge lead in Bitcoin mining will erode only gradually, while the next move of its regulatory apparatus remains as opaque as ever. One more factor to consider before jumping on the Bitcoin wave.
Bitcoin Is Hitting Records. It Could Be Worth 5
Times as Much
By Al Root : Updated Jan. 5, 2021 1:53 pm ET /
Original Jan. 5, 2021 11:56 am ET : BARRON'S
NEWSLETTERS
The Barron's Daily
A morning briefing on what you need to know in the day ahead, including exclusive commentary from Barron's and MarketWatch writers.
Dreamstime
Valuing Bitcoin is hard.
Analysts can’t value it as they value a traditional company. There are no
earnings or dividends to look at or management teams to evaluate. Despite those
challenges, Wall Street still tries.
The latest Bitcoin potential price comes from J.P. Morgan
strategist Nikolaos Panigirtzoglou.
He wrote Tuesday that Bitcoin could be worth as much as $146,000. That’s up
roughly 350% from recent levels.
Bitcoin, sometimes referred to as digital gold, is often compared to the
precious metal. Investors still hold gold as a hedge against inflation and as a
way to diversify returns away from stocks and bonds.
Bitcoin’s potential convergence with gold in investment portfolios, is
how Panigirtzoglou comes up with his target for the cryptocurrency. He believes
there is about $2.7 trillion of “private gold” in the world, which excludes the
gold held by central banks. The value of all the Bitcoin in circulation,
meanwhile, is roughly $575 billion.
This market cap of Bitcoin, he wrote, “currently would have to rise by
4.6 [times] from here, implying a theoretical Bitcoin price of $146,000, to
match the total private sector investment in gold via ETFs or
bars and coins.”
But for Bitcoin to reach parity with gold as a store of value, it would
have to be a less volatile. Gold, for instance, has ranged from about $1,450 an
ounce to $2,075 an ounce over the past year. That $624 gap is equal to about
35% of the midpoint of the high and low prices.
Bitcoin, on the other hand, has ranged from about $6,800 to $35,000 over
the past year. The almost $21,000 spread is about 135% of the midpoint of the
high and low price.
Volatility makes it hard to use Bitcoin as a traditional portfolio
diversification tool.
Panigirtzoglou does appear to believe the Bitcoin market is overheated:
“While we cannot exclude the possibility that the current speculative mania
will propagate further, pushing the Bitcoin price up toward the consensus
region of between $50,000 to $100,0000], we believe that such price levels
would prove unsustainable.”
The $146,000 figure isn’t an official price target, yet Panigirtzoglou
does think it can be a long-term target as Bitcoin volatility fades and as
people get used to the idea of putting investment dollars into a
cryptocurrency.
He also has another thought about valuing Bitcoin: intrinsic value.
Gold’s intrinsic value, in theory, is some spread over what it costs to mine
the metal. Bitcoin is also “mined”—by running complex calculations through
computers, which use electricity. He estimates it can cost Bitcoin miners
roughly $10,000 to get a single Bitcoin for their efforts.
Bitcoin was up 3.5% to more than $32,000 Tuesday. The S&P 500 and Dow Jones Industrial Average were both up about 0.1% in midday trading.
Bitcoin Continues to Set Records. Why Prices Can
Keep Going Higher
By Connor Smith : Updated Dec. 30, 2020 4:27 pm ET / Original Dec. 30, 2020 3:54 pm ET : Dreamstime
Bitcoin’s price hit a record Wednesday. A strategist at Fundstrat sees
even more upside from current levels in the next six to 12 months.
The cryptocurrency touched $28,871.87 earlier Wednesday, its highest level
on record, according to Dow Jones Market Data. It has since pulled back a touch
to $28,819.92, up 7.3% from its levels at 5 p.m. on Tuesday. Bitcoin has soared
more than 493% from its 2020 bottom around $4,857 on March 12.
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David Grider, lead digital strategist at Fundstrat, said Bitcoin’s
positive momentum is being fueled by institutions and corporations purchasing
more of the asset and retail demand driven by the latest wave of stimulus checks, among
other factors. He raised his six- to- 12-month target on Bitcoin to $40,000,
up from his prior target of $25,000.
“Conditions are in place for a continued rally in cryptocurrency prices
over the course of the next year,” Grider wrote. “We remain bullish and are
raising our Bitcoin price target from $25,000 to $40,000, while again noting
that we recommend investors seeking to add exposure should favor pull backs
given the recent run and corresponding higher valuations.”
Given the recent run, some might look to take profits, Grider noted,
which could slow or reverse the rally. Other bumps may be ahead, such as
potential regulatory actions and other new cryptocurrencies.
“We wouldn’t view these events as long-term negatives for Bitcoin, but
if such events unfold, they may negatively impact broader market sentiment and
prices,” Grider added.
While Bitcoin certainly has its skeptics, others
have also raised their price targets for the cryptocurrency. Citing similar
catalysts, ARK Investment Management CEO Catherine Wood in November said that
Bitcoin prices could eventually climb to $500,000.
Strategists have turned positive on the asset, too. Jim Paulsen, chief investment strategist of Leuthold Group, told clients last month that Bitcoin could be a way to balance their portfolios. As Barron’s noted earlier this month, there are numerous ways to invest in Bitcoin, so long as you watch out for fees
UNDERSTANDING BITCOIN RISK
“Cryptocurrencies such as bitcoin have provided investors an opportunity
to get filthy rich. For example, a $10 investment
in bitcoin back in 2010 would have been worth a staggering $1.6
million today. While the flagship digital currency has generated mind-boggling
returns there is also a chance that investors may lose all their money.
Is
investing in bitcoin safe?
There are several risks associated with investing in bitcoin.
Cryptocurrency exchanges have been vulnerable to several hacking incidents over
the years and the security breaches have led to sizeable losses. As
cryptocurrency is an unregulated industry there is scope for price manipulation
by large investors as well.
Bitcoin and peer cryptocurrency instruments are highly volatile and have
experienced a decline of close to 90% on multiple occasions in the past.
The
bull case for cryptocurrencies
According to a
report from Fool.com, “Bitcoin’s fundamental premise has been that
decentralized digital currency offers advantages over government-issued fiat
currencies for those seeking to preserve value. Bitcoin owners don’t have to
worry about the actions of central banks or regulators and their potential impact
on its value in comparison to other forms of money.”
Bitcoin is said to be an alternate option to traditional fiat currencies
and should ideally thrive when there are global uncertainties. The current year
has been volatile and impacted multiple global economies as well as raised
questions over the efficacy of the monetary systems.
The unemployment rates have soared which has led to billions of dollars
paid via federal benefits. These quantitative easing measures may also weaken
the U.S. dollar. Further, this year has also seen an increase in the adoption
of bitcoin and other crypto-assets.
Digital payments company PayPal is now allowing users
to buy and sell cryptocurrencies such as bitcoin, Ethereum, bitcoin cash, and
Litecoin on its platform.
This has driven an impressive rally in the price of bitcoin which is now
trading around $18,000 and has more than doubled year-to-date.
Bitcoin
can be bought on the TSX
A Canadian company called 3iQ that operates out of Toronto is offering a
product that can be traded on the TSX with bitcoin as
the underlying asset. The fund is called The
Bitcoin Fund (TSX:QBTC.U) and its sole holding is Bitcoin as the ETF aims to track
the price movements of this asset.
Investors need to understand that the fund is not cheap and has a
management fee of 1.95%. Further, 3iQ warned investors and said the Bitcoin
Fund is “appropriate only for investors who have the capacity to absorb a loss
of some or all of their investment.”
The Bitcoin Fund has a market cap of $178 million and was listed on the
TSX in April 2020. It’s trading at a price of $21.23 which is 93% higher than
the price of $11 per unit on April 9, 2020.
Bitcoin continues to remain a high-risk high-return investment. It is not advisable to allocate a substantial portion of your life savings to this highly volatile asset." per Motley Fool.com
Published By RC Goodwin Today Jan 8TH
2021 A.D.E. SINCE TIME BEGAN : salus populi suprema est lex - the right of the people is the supreme law : IN TRUTH WE TRUST 2021 A.D.E.
