Bitcoin has continued on its path to world dominance with a retest of Q2 2019 highs. The only thing which is looking juicier than holding Bitcoin now is mining it. Despite price rising, huge amounts of hashrate is coming offline due to the end of rainy season in Sichuan. That means miners are enjoying both greater revenue and will have a significant reduction in their input costs once the difficulty level adjusts to represent the hashrate drop in three days.
Bitcoin is not the only asset that has been surging recently. An investment craze in Pokemon cards has kicked off with influencers like Gary Vee, Logan Paul, and Logic publicizing their purchases. While Bitcoin is undoubtedly distinct from any other asset class, it does share some interesting similarities with the Pokemon card collecting market.
We analyse the brand dominance, limited supply, and antifragile characteristics of both Bitcoin and Pokemon cards. We break down how these factors are playing into the value of both and how they have put them in a position which is orders of magnitude stronger than competitors.
Market Movements – Lucrative Bitcoin Mining Conditions
Bitcoin market conditions have been extremely bullish with price recently attempting to surpass price highs formed in June 2019. Conditions are shaping up to be extremely lucrative for Bitcoin miners with both their bottom-line and top-line simultaneously improving.
Bitcoin price is currently trading 17.3% higher than its value at the last difficulty adjustment. Despite prices trading higher, the difficulty level is estimated to decline by roughly 13.5% at the next adjustment in three days.
The estimated drop in difficulty corresponds with the end of the rainy season in China’s Sichuan province. Sichuan houses the dominant share of Bitcoin hashrate during rainy season and many of these miners will have their rigs temporarily offline as they transition the hardware to coal-powered regions like Xinjiang and Inner Mongolia.
Industry Developments – PayPal, Mode, Marathon Patent Group, and Bitfarms
PayPal launches a service to allow users to buy, sell, and hold cryptocurrencies. This is likely the most bullish news of 2020 after the entry of several publicly-listed firms to the Bitcoin market. The PayPal cryptocurrency service appears to be an attempt to monetize their mobile app Venmo which has over 40 million users. That’s a lot of retail capital that will have the opportunity to buy and hold cryptocurrency through their mobile.
UK publicly-listed firm Mode Global Holdings PLC announced in a press release that it will invest up to 10% of its cash reserves into Bitcoin. We recently noted how MicroStrategy investing in Bitcoin may pave the way for other publicly traded companies to enter the market. The fever seems to have spread overseas with UK firm Mode intending to convert up to 10% of its cash reserves into Bitcoin as part of a long-term treasury management strategy. The strategy aims to protect shareholders from currency debasement and allocate capital away from low-interest money market instruments. Unaudited financial reports included in their September 2020 IPO prospectus reported that the firm had the equivalent of $11.65 million in cash.
Marathon Patent Group purchases an additional 10,000 Antminer S19 rigs. The rigs will be delivered between January and March of 2021 and will add roughly 1.1 EH/s to Marathon’s hashrate output. Marathon previously secured a contract for the purchase of 10,500 rigs which will be delivered between January and June of 2021. Marathon CEO anticipates that the firm’s total hashrate will be 2.56 EH/s once all of the mining rigs have been delivered.
Bitfarms is negotiating a 200 MW contract with a South American private power producer which would secure an electricity rate of $0.02 per kWh. At this electricity rate and at current difficulty levels, Bitfarms CEO estimates that their electricity cost per Bitcoin mined will be $2,538.
HASHR8 Podcast – Crusoe Energy Co-Founder and CEO Chase Lochmiller
Crusoe Energy co-founder and CEO Chase Lochmiller joins the podcast to discuss how Crusoe is helping mitigate flaring by enabling oil producers to use flared gas for Bitcoin mining operations. Chase also shares his experiences climbing Mount Everest.