July 15, 2021 -- InvestorsHub NewsWire -- via NetworkNewsWire
Editorial Coverage: There is little debate that the crackdown
on cryptocurrency mining in China has significantly disrupted the
markets and dampened sentiment towards digital currencies. What is
more open for discussion is the rationale undergirding Beijing’s
mandates to shutter the vast majority of its cryptocurrency miners,
companies using warehouses of computers guzzling electricity to
solve complicated math problems integral to the process of creating
new coins and keeping the immutable digital ledger of transactions
known as the blockchain. Ahead of the crackdown, 50-60% of all crypto mining activity transpired
in China. A top producer of greenhouse gas emissions, Chinese
provinces are under directives to slash pollution, for which crypto
mining is a contributor. There is also speculation that the
People’s Bank of China wants to be the first developed nation with
its own digital currency, which would mean it doesn’t want to
compete with Bitcoin. Regardless of the motivation, sweeping
legislation has ordered miners out of the country, which will be a
boon for the U.S. and Canadian cryptocurrency markets going
forward. That’s good news for companies such as ISW
Holdings Inc. (OTC:
ISWH) (Profile), which specializes
in mining and portable, renewable-energy powered mining centers.
Outside of the mining realm, the China-induced drip also provides
an opportunity for companies that embrace, support and accept
crypto, such as Overstock.com Inc. (NASDAQ:
OSTK), PayPal Holdings Inc.
(NASDAQ:
PYPL), MicroStrategy Incorporated
(NASDAQ:
MSTR) and Coinbase Global Inc (NASDAQ:
COIN).
- North America is forecast to become the largest cryptocurrency
mining market following about 90% of China’s mining capacity being
eliminated.
- ISWH recently finalized a land lease development deal to move
forward with the first phase of a planned 100-megawatt (“MW”)
crypto mining project on a seven-acre parcel of land in
Georgia.
- The first phase will include at least 20 MW installed across 20
of the latest iterations of Bit5ive’s POD5 units, a development
expected to generate $10 million in revenue annually.
- When at full capacity, the ISWH project is forecast to create
$100+ million in revenue each year.
Click here to view the custom infographic of
the ISW Holdings editorial.
China Hands North America Crypto-Mining
Dominance
Interest in Bitcoin investment and mining has accelerated over
the last decade. Understandably so, considering Bitcoin prices have
climbed from $1 in April 2011 to $157 in 2015 to a high of $64,859
in April 2021. Currently, miners receive 6.25 Bitcoin for every new
block that they mine. With that type of payout, competition has
become fierce, as demonstrated by a spike in hashrate, the industry
term for the total amount of global computing power mining Bitcoin.
However, China’s government orders caused a nosedive in hashrate,
which recently hit a one-year
low as miners in the country were forced to pull the plug
on operations.
While non-Chinese miners hustle to capitalize on less
competition, Chinese miners head to other countries and look to get
back in the game. Almost certainly, hashrate will climb in the
coming months as new mining centers are energized. China’s mining
capacity being cut by 90% is only transitory as miners relocate,
including some experts
predicting that North America will replace Asia as the
largest crypto mining market.
ISW Holdings
Inc. (OTC:
ISWH) is a diversified holding company specializing in
early-growth companies with a portfolio that includes renewable
energy, spirits, a healthcare division focused on telemedicine, and
a partnership with Bengala Technologies to develop new products for
supply chain management. In 2020, ISW Holdings forged a joint
venture with Bit5ive LLC, bringing digital currency and
crypto-mining support services to ISWH’s portfolio for the purpose
of mining cryptocurrency with a net zero carbon impact. As it went,
the timing was perfect against the backdrop of the Chinese exodus,
mining opportunity and demand for green mining technologies.
Bit5ive is an official distribution partner of Bitmain, the
industry-leading fabless manufacturer of computing chips and
distributor of Antminers (a wildly popular cryptocurrency mining
computer) to more than 30 countries in Latin America, Central
America and the Caribbean. In addition to a portfolio of mining
equipment and management services, Bit5ive has also developed and
markets POD5 mining centers and Power Skid 2.5. Cumulatively, POD5
and Power Skid 2.5 offer miners the most efficient crypto-mining
infrastructure available today.
Millions in Bitcoin Coming from PA
The JV between ISWH and Bit5ive was initiated in May 2020, and
by December, the mining facility in western Pennsylvania was set in
motion. The project, which includes Bit5ive technology and Bitmain
Antminer s17 units, has been advanced in spite of unprecedented
headwinds related to COVID-19 and booming demand for mining
equipment. Hashing, or mining operations, are expected to start
imminently, according to Bit5ive founder Robert Collazo, as final
tweaks are made to optimize operations.
While every miner would surely like to see Bitcoin prices back
up near their record high, the price of the crypto is not a deal
breaker for mining operations at ISWH. According to ISWH president
and chair Alonzo Pierce, management’s
analysis indicates that the Pennsylvania operations can
run profitably even with Bitcoin down in the “low 20k’s.” Bitcoin
currently is trading near a support level around $32,000, leaving
plenty of headroom for net income.
The Bit5ive team has made adjustments to raise the hashrate at
the Pennsylvania unit to 54,000 terahashes per second. At that
rate, it is estimated that the facility will complete enough
blocks to produce $500,000 monthly, or about $5.8 million on an
annualized basis, in revenue. Collazo, a seasoned vet in the mining
space, understands that mining requires constant refinements to
maximize efficiency and hashrate, which Pierce says will translate
proportionately to reducing operational expenses.
Hockey Stick Revenue Growth
On July 7, 2021, ISWH hit a milestone as it finalized a
land-lease development agreement granting the company unabated use
of seven acres of land in Georgia. The property was selected
specifically because of its ideal setup for crypto mining,
including access to energy resources necessary for ISWH to scale
the project to more than 100 megawatts (“MW”) of mining capacity.
During the first phase, ISWH intends to deploy about 20 MW of
energy to power 20 of the newest generations of Bit5ive POD5
units.
Initially, the project is expected to generate $10 million in
revenue per annum. In subsequent phases, the project will be scaled
to more than 100 MW, which should qualify ISWH as a “top-five”
crypto miner by volume, according to Pierce.
At that point, annual revenue is forecast to top $100 million.
The ISWH chief says the mass departure from China has companies
reaching out to his team. “We are already fielding calls from
mining firms seeking a new home. We are now equipped to handle this
at scale. We have the power!” exclaimed Pierce in the news release
on the new land agreement.
The POD5 Advantage
Bit5ive is bringing mobility to its cutting-edge POD5 units,
which upon a quick glance resemble a classic cargo container. Of
course, the units are much more, including thermal management
systems and customizable Bitmain computer configurations — all
powered by renewable energy sources. Wrapped up in one neat package
of high-strength steel, the units have additional benefits where
other mining farms may not be able to compete, such as flexibility
in installation location, ability to withstand harsh conditions and
faster build out or relocation.
Originally developed four years ago, Bit5ive launched a third
generation of its POD5 last year. ISWH’s partner is on a mission to
increase its POD5 operations more than 13-fold this year. The
company intends to put 28,000 new miners into operations and add
100 new POD5s to its portfolio, up from eight in 2020, by the end
of December 2021.
In a bid to increase revenue and profitability, ISWH and Bit5ive
will be sharing their resources and processing power with a group
of other miners. A crypto co-op of sorts, “mining pools” are
growing in popularity where companies work collectively over a
network, an emerging trend resulting from depreciating risk/reward
profiles in mining. There are many strong pools to consider,
including Bitmain’s Antpool, said
Collazo in a recent Waypoint Podcast, but the plan is
absolutely to join a collective.
Consolidation Always an Opportunity
Only around for a decade or so, the cryptocurrency market is
going to be volatile as it experiences growing pains. China may be
down on Bitcoin for now, but the free capital markets have strongly
embraced it, lending credence to the notion that crypto isn’t going
anywhere. Pullbacks are part of a healthy market and almost always
treated as opportunities as a further vote of confidence for the
future of the market.
Overstock.com Inc. (NASDAQ:
OSTK) has undergone a massive surge in value
since bottoming at $2.53 in March 2020 at the height of the
coronavirus pandemic to around $100 today. The retailer not only
benefited from the e-commerce boom during lockdowns but also from
its long-running investment in blockchain and cryptocurrency
technologies. OSTK CEO Jonathan Johnson has been a vocal advocate
of these technologies, with Overstock a first mover in accepting
cryptocurrency payments and launching Medici Ventures to support
upstarts focused on blockchain advancements.
PayPal Holdings Inc.
(NASDAQ:
PYPL) has been another pioneer in cryptocurrency,
launching services that allow its users to easily buy, sell, hold
and transact with crypto. Through its platform, PayPal users can invest in Bitcoin, Ethereum,
Bitcoin Cash and Litecoin. PYPL has also made it so users of its
popular mobile wallet Venmo can buy and sell these cryptos. Retail
investors flooded PayPal in November, reportedly buying up to 70%
of all newly created Bitcoin as the coin was spiking from under
$14,000 to near $20,000.
MicroStrategy Incorporated
(NASDAQ:
MSTR) is the largest independent, publicly traded
business intelligence company. It is probably better known as one
of the most aggressive buyers of Bitcoin in the world. In
June, MicroStrategy bought approximately 13,005 more
Bitcoins for approximately $489 million in cash at an average price
of approximately $37,617 per bitcoin, inclusive of fees and
expenses. As of June 21, 2021, MicroStrategy holds an aggregate of
approximately 105,085 Bitcoins.
Coinbase Global Inc. (NASDAQ: COIN),
a leading cryptocurrency exchange, went public via a direct listing
in April 2021. The uptake of cryptocurrencies by retail investors
is easily measured by Coinbase,
which has seen its user base grow from 32 million in 2019 to 43
million in 2020 to 56 million in April. The company, which serves
as a crypto wallet, happens to be the partner of Overstock.com to
make cryptocurrency purchases possible for Overstock customers.
During the first quarter of 2021, Coinbase reported $1.8 billion in
revenue, up from $585 million in the previous quarter, and $771
million in net profit, up from $177 million in Q4 2020.
There’s no doubt that China shook the crypto markets in recent
months, and while the movement may rattle some companies and
investors, it will be looked at as serendipitous by others that
recognize cryptocurrencies are here to stay. Indeed there will be a
shifting of the landscape as miners fly and boat towards North
America, which will be one more market segment where investors can
be looking for opportunities as the burgeoning markets evolve.
For more information about ISW Holdings
Inc., please visit ISW Holdings
Inc.
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