**Found this great post and had to share it.....
Unless you've been living under a rock, you know by now that Bitcoin is being widely adopted by institutions and companies as an inflation hedge. SQ Inc purchased $50M worth of Bitcoin in October 2020. Bitcoin price skyrocketed to $41,000 (See Link). Ray Dalio and Elon Musk has been supporting Bitcoin (See Link) Elon talked about how he wish he invested just a little bit in Bitcoin when his buddy told him about in 2013 on his recent Clubhouse event. But that wasn't really what we needed. We needed more companies investing in Bitcoin, exactly what Square did in October of 2020. Well we got exactly what the Crytocurrency world needed, Tesla just invested $1.5B (BILLION) in Bitcoin.
I am not here to talk about investing in Bitcoin. I want to talk about stocks that are piggy backing off the Bitcoin Boom. Companies like MARA and RIOT has seen over 10x gains since Bitcoin hit over $40,000 in Jan. These stocks have been consolidating and loss about 25% of their gains from the beginning of January until the beginning of February. Once news broke out that Tesla invested into Bitcoin, these stocks went flying again closing the gap.
Now you are probably wondering what these companies do? They are mining companies and their business model consist of purchasing "Super computers" to mine Bitcoin.
These machines typically cost around $3-4k and the return on these machines are around 5-6 months. See below for an example:
Bitmain S-19 Pro: 110TH/s @ $3,700 a unit. Using the Nicehash Calculator , you will see each unit is generating $22/day ($0.10 kWh cost already included) . $3,700/$22 = 168 days to see a return.
We can expect with the Bitcoin Bull run that mining will get more difficult as the more machines come online, the more difficult. So companies like MARA and RIOT need to keep adding more machines to probably scale revenue. What about the companies that supply these machines? Would you rather be a company that gets money upfront, or wait until 5-6 months to get your money back?
Now you can't invest into Bitmain as it's failed to IPO. That's where Canaan Inc comes in who is one of leading suppliers in miners of ASIC miners.
They recently sold a total of 12,000 units of their A12 to Hive Blockhain (HIVE Blockchain Technologies Ltd. (HVBTF) and Core Scientific (See Link). Last I check, these go between $3,000-$5,000 where currently, people are just selling high but you can assume these companies went to Canaan directly. $3,000 x 12,000 units = $36M.
These units are also just as profitable as Bitmain's S-19 Pro (See link)
All this being said, I think this stock has potential to 5x in the NEAR term.
The current market cap is $1B whereas Bitmain was recently valued at $50B (See link). I see Canaan taking some market share as other mining companies will look to scale up operations fast and we all know Bitmain does not have the capacity to keep up with demand.
The best part about Canaan is that there is no PR around them (See image below)
I know there was a short attack on this company when it it had its IPO back in 2020 however I cannot find the link.
It gets better... Canaan has also been developing processors for AI/Machine Learning and Data Architecture. Their product is called Kendryte K210.
The Kendryte K210 is a system-on-chip (SoC) that integrates machine vision and machine hearing. Using TSMC’s ultra-low-power 28-nm advanced process with dual-core 64-bit processors for better power efficiency, stability and reliability. The SoC strives for ”zero threshold” development and to be deployable in the user’s products in the shortest possible time, giving the product artificial intelligence.Kendryte K210 is intended for the AI and IoT markets, but is also a high-performance MCU.
Processor Architecture: RISC-V Dual Core 64bit, with FPU
There is not much sales data but we know that they sold around 50,000 in 2019 (See link)
The focus in RISC-V development is the reason why Canaan has not seen "profits". This is something they are really investing heavy in since the RISC-V sector is going to see massive growth. See image below
Guess who else believes that RISV-C is the future of data center architecture? ARK Investments...
What are your thoughts? Do you think this picks-and-shovels play has more upside than the mining companies?
NOTE: This stock literally jumped 10% after market as I wrote this post...
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