09/12/2022
In a shocking turn of events, I actually have something positive to say about the crypto space this week [cue gasps].
Most of you already know that I’m a Boomer No-Coiner. I have no interest in speculating in crypto. But I’ve always said that I would be open to owning a cryptocurrency miner, which is an actual business that produces something.
Recently I happened across an extremely interesting explanation of Bitcoin’s economics from a seasoned value investor that I admire. Murray Stahl’s newly-published essay, which I review and summarize in the article below, demonstrates why a crypto miner can be an attractive investment under the right circumstances. I encourage you to read the paper in full.
As you can see, I can be nice to the crypto folks…sometimes.
Peace out.
Mike
Business Bites
Analysis, Reviews, and Weird Business News
The Economics of Bitcoin
Cryptocurrency
In an annual letter to FRMO shareholders, value investor and crypto believer Murray Stahl argues that three main factors influence Bitcoin’s price on the supply side:
the cost of mining equipment
the halving date
the aggregate hash rate, or processing capacity
Analysis: According to Stahl, a 70% decline in the price of mining equipment between late=2020 and mid-2021 largely drove the collapse of Bitcoin’s price from the peak. Over time, Stahl believes that Bitcoin’s price will rise as mining costs rise due to reduction in the reward given to miners and increases in network processing power.
Mining > HODLing: Stahl argues that crypto mining presents a better risk-reward than HODLing because miners are continuously producing coins, and they can simply turn off their machines if the price of Bitcoin makes mining uneconomic.
Mogul Moves
Tracking Big Investors and Business Leaders
Digital World Acquisition Corp DWAC 0.00%↑, better known as the "Trump stock," briefly cratered last week on fear that the SPAC's shareholders would vote down the planned merger with the former U.S. president's Truth Social - an outcome that would collapse the share price from $22 back to $10. Trump himself later mused about taking the social media company private, noting in a statement that "I'm really rich."
Kim Kardashian, who has amassed a net worth of $1.8B for “being famous for being famous,” is launching a private equity fund (the bean counter behind the curtain is a former Carlyle Group partner). The jokes write themselves.
Asana ASAN 0.00%↑ founder and CEO Dustin Moskovitz bought $350M in shares last week, raising his ownership stake by 80%. Moskowitz, who previously cofounded Facebook, previously bought stock near the peak of the bubble (he joked on Twitter in June that “I’ve discovered ways of losing money I never even know I had in me.”).
Disney DIS 0.00%↑ CEO Bob Chapek told the Financial Times that the company would not spin off ESPN, as investor Dan Loeb has argued they should do.
FTX CEO Sam Bankman-Fried continued his buying spree by taking a 30% stake in SkyBridge Capital, the crypto firm founded by Anthony “The Mooch” Scaramucci.
Memes and Sarcasm
Well it couldn't be a hedge fund, because we know that she likes long only
me with oil stocks 😭
too soon? lmaooo
Last Week’s Issue
Contact
Email mike@tycoonist.co or reach out on social media.