Sesterce Talk Episode 6: Bitcoin Mining Farms are getting Public Listed and why you should care?

Written by
Sesterce Team

Sesterce Talk Episode 6: Bitcoin Mining Farms are getting Public Listed and why you should care?

Written by
Sesterce Team

Sesterce Talk Episode 6: Bitcoin Mining Farms are getting Public Listed and why you should care?

Written by
Sesterce Team

Crypto IPOs have been huge in 2021, a few years ago buying cryptos in general was considered as high risk investments and now we have a growing number of publicly traded crypto companies getting listed, which is a clear indication of strong growth and bullishness for the industry.

Many crypto exchanges, mining manufacturers, #bitcoin mining farms are getting listed or are in process to get listed. 

Riot Blockchain , Cleanspark, Bit Mining , Bitfarms ltd are few of the top crypto mining companies which are now listed and giving huge returns to their investors.

LETS UNDERSTAND WHETHER WE SHOULD INVEST IN THESE PUBLIC LISTED BITCOIN MINING FARMS OR NOT

Every month Sesterce host Sesterce Talk where we discuss with experts about crypto mining, best practices and more. Watch our Sesterce Talk episode where we have covered everything related to crypto IPOs and these listed mining farms.
Youssef El Manssouri-Co Founder Sesterce Groups explains why investment in Bitcoin mining farms is a great idea

Why do so many mining companies want to get publicly listed?

Bitcoin mining at this level of scale is really profitable. In this business revenue & profits means more and more mining rigs under control. Obviously you want to raise funds to boost that growth. Getting publicly listed is arguably the easiest & convenient way to raise this amazing amount of money to build high scale mining farms. 

The Big investors in Stocks Market, how do they look at these #mining #farms as an investment? Will they be investing in Bitcoin mining farms?

Until October 2021 before the Bitcoin ETFs were not allowed a lot of institutional players couldn’t just invest in bitcoin as they required a regulated firm or an etf for crypto investments. Hence investing in these crypto mining companies or firms similar to Microstrategy who are buying bitcoin makes perfect sense to them. Risks involved in the current markets are not the same as 2017. With exponential adoption of Bitcoin investors are now more open. Also Bitcoin has been creating wealth consistently which means these firms whose sole purpose is to bring wealth to their stakeholders must expose themselves to Bitcoin.

Institutional investors have multiple investment products based upon the risk profiles and expectations of the stakeholders. A few already started offering Bitcoin specific investment products based upon the risk appetites of the stakeholders.

Will the price of these listed mining farms crash too if the Bitcoin price crashes? What is the relation between them ?

The short answer is Yes, for the crypto mining company there is definitely a strong correlation between the price of listed mining farms & BTC prices. But it's a trend that will not exist in the near future because the mining business is different from the bitcoin price. These companies can mine bitcoin with very cheap operational cost and they can still be profitable with the level of scale that they have. Which means that even if BTC undergoes a 50% correction, these farms will still be in profit. Investors will soon realize this fact and Bitcoin price fluctuations will be less effective to these mining farms.

If these Mining farms are #HODLing most of their #Bitcoin, then how are they managing their operational costs?

 If we take an average of two years bitcoin price is always higher than the price two years ago. So it really makes sense for them to keep their bitcoin to benefit from the price appreciation.

Historically speaking miners or mining farms had to sell their Bitcoins to cover their operational cost, which includes electricity cost, purchasing/repairing miners, salary & other things. But now the story is different. Bitcoin has gained a significant credibility amongst the people. Now they can easily raise, we have many services available that let them put Bitcoin as a collateral to raise funds. Which means now mining farms  don’t have to sell their Bitcoin to cover their operational expenses.

Should we invest in Bitcoin/ETH mining Farm, when we can directly invest  #BTC and #ETH?

This is an valid question, investment in crypto has given an incredible amount of returns, so if you are able to easily invest in the base asset(i.e Bitcoin) then why should we invest in these mining farms? Here are a few points which might help make your decisions :

Crypto Mining Farms have ACTUALLY outperformed Bitcoin

The performance of spot Bitcoin versus crypto-focused stocks in a year. Source: Ecoinometrics.

In 2021 a majority of mining companies have outperformed bitcoin itself. Bitfarms Ltd a NASDAQ listed leading mining farm had price per share of approx. $0.60 on November 21 and now after 1 year (November 2021) it is floating around $9 per share. An astounding 15X return on investment. During that time Bitcoin has given a 4X return, so it has literally outperformed bitcoin. So without any doubt we can see that mining companies are outperforming bitcoin. 

Bitfarms Ltd's price between May 2020 to November 2021

Mining farms investments is great deal available at discounted rates

In our opinion these mining farms are currently undervalued and people are yet to realise the fact that mining mining companies can still be profitable even if we experience another Bitcoin crash. In fact, during the recent crash you can say that miners became more profitable during the crash as they mined more Bitcoin than before.   Considering these economic parameters of a company, a mining company is a very good deal and that's why a lot of people also are investing in them directly because at the end we can be in bigger markets and mining companies stay profitable while bitcoin is going down. So it's a different way to see the markets. All these mining farms can give you a similar return if not better

Lesser volatility means less stressful than crypto market

Since mining farms are profitable regardless of the price of Bitcoin, eventually their price will not be as volatile in comparison to Bitcoin. You don’t need to constantly check their prices to witness significant movement in a short duration. These listed mining farms are a way to avoid these stressful monitoring that we require for bitcoin, Ethereum and other altcoins. 

A great hedge from the bear market and diversification.

If you have already invested in altcoins, ICOs. It is smart to diversify into these mining farms which are a good hedge against the bear market. Although the data is not enough to say with certainty about how the market will react to these listed companies whenever the bear market arrives. However their consistent revenue even in bear markets should make them less volatile.

The conversation about the mining farms continues , watch the further conversation on YouTube:



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