financetechy wrote: Lets dive in (remember this is a stream of thought, so look out below as per my last post)
To start in simple terms, what is the business case for a bitcoin/ether miner? Btc miners mine the blockchain to gain coins daily, they then Hodl (1st use of Hodl many more to come) most if not all these coins on their balance sheets, big players HUT8, BITF,MARA,RIOT etc all keep almost every coin mined. Now because of what Bitcoin block chain is....the code is very simple in a sense...written mostly in CC+ which makes it very robost,decentralized and secure, but because of this program, it turns out Btc is not really suited to (i mean 1,000 per hour+++ smart contracts) a lot of use cases.This is not a criticism, the beauty/simplicity of bitcoin is what makes it a perfect store of value (truly the digital version of physical gold...and i like both!)But because of this design the gas fees earned for bitcoin on a proportional basis are nice but not earth shattering. Why? well if btc had 1,000's of use cases the activity rate would go through the roof and gas fees would rocket...but thats not what bitcoin is, because its sitting on mostly cc+, so go look at all the pure bitcoin miners, they have great balance sheets lots of coin ever growing in $value, but not a single miner except for HUT8 is even profitable on their P&L and have little to no net cash on the balance sheet, but as i said HUT 8 is modestly profitable but only has a couple of million on its balance sheet..hmmm... that means mining bitcoin and Hodl + fees alone gives very little cash each qrt, so from an earnings per share perpspective every bitcoin miner currently has little to no free cash on their balance sheet and are negative profitability...we could ask when do they become profitable? Yes Bitcoin is ever more valuable, but until these miners monetize those coins what is their eps?
Enter the Ethereum blockchain and Hive, the ethereum chain is designed and written to run 1,000's of smart contracts daily (being upgraded continously for 10,000++) so the big difference is bitcoin is slow,safe,secure and a store of value but not alot of use, versus ethereum smart contracts being used for a multitude of things Defi, NFT etc billions of dollars and growing exponentially, now enter Hive (remember i dont work for them just an observer/investor) yes they mine bitcoin, but it is only a small portion of their efforts, Hive spends a large portion of its resources mining ether and is the largest publically traded Ether miner. So lets look at their balance sheet and P& L.
Over the last 2 years....they have been mining mostly Ether and some Btc and selling all btc and most Ether every qrt, these sales along with modest gas fees up until DEC 2020 has allowed Hive to become modestly profitable ever since the summer of 2020, with earnings per share on par with HUT8. As of 3rd qrt earnings published Feb 21 2021 Hive had $15 million u.s. of Ether on balance sheet(best guess about 13,000 coin) and approx $ 5 million of cash on the balance sheet and $.05 profit for the qrt...and a total $.09 for 3qrts of 2020....not bad compared to every other Btc miner, btw Hive earnings are not calander, so 4th qrt has only just ended March 31st 2021...Now as of April 7th after end of the 4th qrt Hive has announced they now have $60 million u.s of coins (20,500 Ether/320 Btc) and $36 million of cash.....Whatttttt? why that would mean Hive in the 4th qrt alone will be announcing May/June earnings for the 4th qrt earnings of $.20 /share approx, this would be quadrupple from $.05 in the 3rd qrt, they did this by starting to increase their Hodl and keeping 7500 Ether in the qrt to add to 13000 prev Ether on their balnce sheet. And most importantly Hive announced that all Ether and all Btc going forward from Jan 1st 2021 for their 4th qrt would be Hodled.
So now Hive is gaining major profitablity daily as they now Hodl 21000 + Ether every qrt and 160+ Btc (the + is the new volume coming from upgrades already being installed) but it gets better... Hive announced April 19 2021 that in the 1st 17 days of the new 1st qrt fiscal 2021that they added another $15 million of new hodl coin, thats approx $850,000 every day dropping on the balance sheet, meaning that from the 3rd qrt on balance sheet they had $15 million Hodle, now as of 1st qrt ending June 2021 they they are on pace to add approx another $70 million in new coin Hodl for a total hodlings of $125 million approx by the end of June!!!! (based on a $2,000 ether and $50,000 Btc price, wow thats some mutiples of increasing profitabilty of .35/40 per share coming every single qrt....oh thats why the share price is rocketing :)))( ya righ!!, but thats another post coming soon)
But how can Hive hodl everything and make big earnings rightnow every single qrt and have cash on the balance sheet as well...its the fees stupid right?, because of ethereum smart contract adapation the use of the ethereum ecosystem is sky rocketing every day...meaning more use therefore allowing eth miners more gas fees, and in the 4th qrt Hive probably racked up north of $12 million in gas fees....giving them approx $31 million of new cash in the qrt just ended. (total 5 mil existing cash+31 mil new cash = $36 million qrt end....Geez my fingers are tired...I hope someone is still reading this!!!
Ok finally Eth2.0/L2 and current fees. Sooo in the new 1st qrt of 2021 starting April 2021 Hive tells us they are socking away all their coins for a new approx $ 70 million us of coin value giving them approx $125 million total by the end of June 2021, but what about cash? how much cash can they genereate a qrt? well if in 4th qrt ending March it was north of $10 million in gas fees, and the ethereum chain use is exploding since January 2021, so then fees will be up again the 4th qrt ended March 31st north of $12 million, so they will add easily another net after exp of $ 4- 6 million of cash adding to that $36 million. Wow....But... But... But....the fees the fees!!! the gas fees are being cut drastically in the summer with another L2 fork up grade and Hive will be bankrupted!!!! (sorry just some bad humour)
So i hoped i cleared up that by end of 1st qrt June 2021 on Hives balance sheet they will have approx $125 million of coin Hodl, thats going from $18 million qrt ending Dec 2020....wow!
Hive's profitabilty is now sky rocketing as we speak....ya ya thats why the share price is rocketing ;(((....(ok ...ok...ill stop with jokes....but another post is coming on that topic)
To summarize Hive is now today and every day making serious value/profit on coin hodl and yes gas fees and will add an additional $ 6 million approx of net gas by June ending and they will have approx $40 million in cash (capital cost, may take that somewhat lower,but the point is they have alot of cash now on the balnce sheet)...and the best P&L and eps and cash holdings in the entire coin mining industry.
Now L2 fork thats coming summer 2021...yes it may or may not really impact those fees very much because gas fees are a direct result of use and ethereum block chain use is smoking with exploding smart contracts...but lets say for fun Hive fees are cut in half right away starting July qrt 2 2021...well this has no impact on profits as they hodl everything and they have near $40 mil in cash by June so all that means is for the next qrt they are adding another $70 mil or more if Eth is just at $2000 in new hodle depending on ether/Btc price and they are covering all their cash expenses running at approx $5 million....and so the only the thing happening with a 50% fee cut in the summer is their cash on hand does not necessarily really grow....hmmm they are now wildly profitable every qrt and they have more cash on balnce sheet than any other miner...so ya fees and the new L2 fork are not a problem at all.....Oh manny! hang on i'm almost done!
ok now the impact of Eth 2.0...right now it is estimated that 2.0 is here maybe if we are really lucky by Dec 2020, but really more likely by early to mid 2022. Well then what about those darn fees...well the answer is basically already known...the Ethereum Beacon chain 2.0 chain is already up and running....its kinda like Eth 1.5...and is testing how staking will function to replace current gas fees...so right now a miner in the Ethereum Beacon chain becomes a validator...they stake 32 coins and receive approx 3.2 coins annualized...so the validator gets 10% standard gas fee annualized...every qrt going foward.
Lets do the math for Hive....they are now adding 21000+ eth coins every qrt, by the time the final Eth 2.0 comes they will have 84 to 100,000 eth coins that they could stake as a validator for an annualized 10% fee approx of additional coins and every qrt their hodle just continues grows allowing them to stake more and more....so ya that gas fee cut in Eth 1.0 which even now is not a problem becomes a big coin/cash money maker as Eth 2.0 rolls in and Hive earns 10% growth on their growing hodl every qrt.....just wow! kinda like a bank earning guaranteed fees every month!....hands cramping...almost there!!!.....
Defi.... i havent even mentioned Defi yet. The standard fee for staking in Defi is currently between 10 to 30% so Hive can infact before Eth 2.0 stake any portion of its ever expanding Hodl (with its new partner Defi Technologies, who Hive owns 10% of now...man this expanding empire never ends) to make somewhere between 10 - 30% in annual fees, this defi staking can be done every every single month generating ever more coins/cash fees....man this is a perpetual money machine!!! and i havent even mentioned Hive's growing BTC hodle and wrapped Bitcoin...did you know the Ethereum block chain accepts "wrapped bitcoin" to turn it into a usable form of defi!....stop, stop its all to much!! Hive has to many forms of earnable income rolling in from its ever expanding stash of hodled Ether and Bitcoin right now.... :00 ... and Visa, Paypal have already launched on the ethereum chain and Master card is getting ready, JP Morgan just announced the formation of an ethereum product group....and on and on it goes.
Hive has first mover advantage in Ether partnered with Defi Techologies...Tiger by the tail!!! and oh Hut8 just announced they are entering Ether mining...they hope to be up to 2,000+ eth tokens a qrt sometime later this year..."welcome to the Machine" Hut8...love that Floyd
I'm done!!!! wheeeewwww, please if this information has proven valuable repost it every few days/or summarize some key points... let the masses know the truth! because you sure would't know anything i just presented is happening by the share price!...but that my friends is for another day and another post...maybe this weekened but for sure in the very near future i will post about what the heck is with the share price of all the miners not just Hive...thats if i can get rid of the cramps in my hands from banging out this anthology!
see you soon spread the word!!!