Bitcoin Mining: does it have legs?

Afternoon all

I was looking at one of the new IPOs that kicked off yesterday, Ebang International Holdings Inc (EBON), opening at $5 per share and ended the day slightly under.

Couldn’t find much on the company (financials via Stockopedia and Morningstar aren’t the greatest, and even their website doesn’t seem well-maintained (although they are a Chinese company and perhaps have a better-updated site in their local domicile, don’t know)) but what I did find of interest was their business, as they specialise in the manufacture of of high performance Bitcoin mining machines.

Bitcoin mining has to be an area to put a pin in surely. At this point in time the rumour mill is rife with suggestion that several large financial firms might delve into the crypto currency market, with many potentially developing their own.

Admittedly I’ve steered well clear of Bitcoin as it is a world I do not understand in the slightest, but surely with institutions growing ever closer to this market (widely reknowned as the future by its supporters), surely the need for Ebang’s (and similar companies) hardware will hit top gear, no?

Would love to hear from others better versed in crypto on the above ideas. Would the BlackRocks and Baillie Giffords of the world need to invest in mining hardware if they were to release their own currency or are these two seperate sub-areas?

Also if anyone here is already invested (or thinking thereof) in similar companies that are available via 212, I’d love to know. Did a quick hunt for a few of the industry leaders but none were on the platform that I could see.

Food for thought I hope. Opinions and advice always welcome.

Cheers

JOE.

Not invested in, or even interested in crypto, but here is what I have gathered:

  • Crypto might as well be an index tracker for the S&P500, as they rise and fall in direct correlation to the markets. I still don’t understand why some call it a hedge, as it performs the same as an ETF index tracker in my eyes but has bigger and more volatile swings.

  • The Bitcoin world just experienced a “halving”, whereby essentially new bitcoins being added into circulation is reduced. So by my eyes, this just makes companies like this have a harder time getting their hands on bitcoin by mining. (I could be wrong, but this is what I gathered).

  • Cost of mining rigs is expensive and essentially a zero sum game if this is the only source of income for the business. Cost of device failure + elec costs seem to make this market super hard.

So, in my eyes, if the cost of bitcoin or cryptos are essentially tethered in recent years to the global stock markets, add in the cost of hardware, cost of hardware failures due to excessive use and the cost of electricity, I can only see this working if luck is on their side. Many of these companies make their money from the smaller Alt coins, but that just presents a huge amount of added risk for a business too. Talking of Alt coins, who knows when the next new big Alt coin is going to take over the market - lol FedReserveCoin ? who knows.

That’s my take on it all, I have side stepped crypto but It may be a good fit for some.

Knew I stopped typing too soon. Yes I knew of this last month and then there’s another in 4 years time. And I think after that, that’s it, bit could be wrong. But yes that was another concern, being if coins are diminishing, at what point does mining become redundant?

Or, does it just ramp up if the big institutions get into the game?

Not sure I follow the connection between this and the practical side of building and selling mining hardware, but your point about the alt coins is a good one and echoes my thoughts on there always being a market for them, particularly if crypto comes to the fore the way many think it will.

These devices aren’t Ebang’s only production line, they’re also in chip tech but as I say, the financials aren’t great so could be your summation is spot on. Still, makes me wonder if there are better boys and girls out there doing the same thing.

Bloody knew this one would come back to bite me in the arse one day! :smile:

On regards of “mining”, I think that Ethereum network is more promising on that, they network are about to release a big update including a sort of interest rating as well, and all the big Corps coming to Crypto, might use their network for their solutions, besides of Bitcoin as store of value.

The thing with Ebang - and the thing I should’ve uncovered back around IPO time when I was thinking about this - is that, over and above the mining machines, they are predominantly working to expand their business by establishing a crypto exchange and mining farms. As well as expanding the possibilities of crypto into financial services, education and healthcare.

Very ambitious but the jump today was due to establishing a subsidiary in Singapore in preparation for setting up the exchange. Big step and one that proves they aren’t mucking about.

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I’ve read a lot about crypto market manipulation, not one for me. If you’d rather put your money somewhere other than stocks or bonds I’d put it in physical commodities.

Coffee would be good if T212 put it on…

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It’s much smaller than stock market manipulation.

No, it’s really not.

The problem I have with Crypto (at least the Broker I use), seems to be that you can’t buy fractional Alt coins for some but you can on others? Pretty ridiculous if that is the case. And staking required an X amount to be put away? Usually in the 1000s unless it is the top 5?

Bitcoins $ value is about 1,000% of what it was at the previous halving, which itself was about 10,000% of its value during the halving previous to that.

If you get half the amount of BTC, but the $ value of BTC has increased 10-100x, then the halving isn’t going to put you off.

Once there are no more unreleased BTC, all the computers will just be processing transactions. They already do this, and get a small cut on every transaction.

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Today… I’m upset.

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Why @Joey_Fantana?
Did Bitcoin rise in value before you bought?

No, my original post was in relation to my indecision around EBON. Ultimately I didn’t buy but on the date of my last post it spiked 40% or so.

It retraced in the end, and I wouldn’t have exited even after 40% so would’ve been excited but still in general it’s appreciated rather well. 101% since IPO.

I don’t know enough about bitcoin, mining, block chain, etc. which has held me back on pulling the trigger.

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I’m a blockchain engineer, but generally would not touch any crypto stock.
Maybe I’d buy ConsenSys if they did an IPO.

Most problem with these companies is that they either mine or rely on other miners buying their equipment, those usually based near cheap energy sources usually either in coal in northern China or geothermal in Iceland. Both places have colder temperatures as well so cooling is cheaper. Usually that’s it though, they might have a specialised rigs with low downtime or better cooling but not much more. Another drawback of them is they heavily depend not just on favouring legislation, but also proof of work being the dominant consensus mechanism. This generally the case now, but might not be in the future. If proof of stake or committee mining was to become more prevalent, specialised mining hardware would be far less of a deciding factor and these companies would worth far less (it would be great for environment too).

Companies that actually innovate in the blockchain “space” usually are much smaller and not traded anywhere. Immutable ledger has limitless applications in property deeds library, stamping signature of an engineer on a certified product/structure, GDPR compliant medical data storage, distributed anonymous voting for local issues ie council or company, archiving of emissions or air quality data, smart contracts that can automate many aspects of current legal/bureaucratic/trading/insurance systems.

Exchanging non-fiat currencies is only a small aspect of blockchain potential, although a very dominant one at the moment.

As for crypto trading and Chinese companies, I once spoke of researcher that looked at market manipulations happening over there. From what he told me government uses the farms to gobble up as much crypto as possible and actively helps them with it with legislation or threat of one. By ordering temporary halt of mining of some farms, artificially stimulating demand on Chinese based exchanges or publicly considering a law that would restrict some aspect of crypto exchange they can raise and lower the price of cryptocurrencies.

According to him these activities are coordinated in such way so that Chinese based farms can skim of the top ever slightly and have an advantage over non-mainland farms by means of a guiding state hand. In that case at least it seems CCP certainly does see a future potential of cryptocurrencies, besides that of their new state backed digital currency.

This is what I heard and have not been able to confirm it, though with non-existent regulation wouldn’t surprise me.

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That is quite scary.

I have about £70 on Crypto.com but the lack of information, a minimum.order limit and minimum amount you are allowed to take cash from has seriously put me off of Cryptos.

Dipped my toe in and got burned as not only can I not take any losses/gains I have made if I don’t meet the minimum threshold, but the way YTers online are telling people to buy into Crypto makes it like a huge Ponzi scheme that if you didn’t join early enough you don’t benefit as much because the earlier Cryptos did massively well and these YTers endorsing Cryptos usually tell you to buy the newest one as it is going up…only for it to crash in price since it is being manipilated.

Painful lesson I learned and I believe the FCA will be banning Cryptos in the UK until the companies clean up their act on that practise, so I think your hearsay may speak some truths. (Jan 6th 2021 I believe according to Yahoo Finance)

I never understand how you all invest in cryptos. so dangerous! and no one back it up its all about buying and selling to other peoples not you can hacked and get stolen!
no Dividends too :frowning:

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