And now…for something completely different 🙂
The world of blockchain and cryptocurrencies has caught my attention. I recently had two posts on this topic discussing my experience so far. As I mentioned earlier this week, I bought a small amount of cryptocurrencies (ETH and LTC) in order to get my feet wet. Since this is an emerging tech, its really hard to figure out who the winners and losers will be. Add the fact that companies are now built on an open source platform and in a completely decentralized way, that makes it harder to pick. To add to the complications, most companies in the space have resorted to having direct token sales and ICOs instead of going to the capital markets…this makes it even harder to get access to good equity unless you are willing to risk a lot more than usual. I have read some of the pitches from some companies raising funds via token and ICO sales — and they were complete nonsense. I wouldn’t touch such companies with a 10-ft pole.
Back to the point of this recent purchase. I initiated a position in a blockchain company. There are plenty to invest in if you go the token/ERC20/ICO route, but the number of companies available in the “traditional” capital markets are very limited.
Last week, I purchased 1,000 shares in Hive Blockchain Technologies Inc (HIVE.V) at CAD$1.08.
What does Hive Blockchain Technologies all about? Digital mining! It is almost fitting that I have investing so much of my capital in precious metal and base metal miners over the last year…why not digital miners? 🙂
Recent Buy Decision
Hive Blockchain recently underwent an exclusive partnership agreement with Genesis Mining (I have an upcoming post about this service…so stay tuned!), based in Iceland — which runs a few blockchain mining centers and is one of the world’s leading cryptocurrency hashrate provider.
Some background on why I think miners are a great investment in the blockchain space.
As I spend more time contemplating, one aspect of blockchain that really stands out as a bedrock of the movement are the miners. The miners are the executors of the computation and keepers of the distributed ledgers, running the protocol and pouring their computational energy into validating transactions. These participants are given a reward for the PoW (Proof or Work) or PoS (Proof of Stake), depending on which model is used for each blockchain.
In the initial days, the hash computations required for encrypting blockchains such as Bitcoin and Ethereum were possible on regular standalone desktops and laptops, i.e., it was possible to run a mining program on your home PC. But as the computations have gotten harder and more complicated, the hash calculations have gotten out of reach from the average Joe running mining software on the PC. The resources had to get pooled together and run by companies, who went from calculating the hash using a CPU to GPUs — which were much more efficient. Later on, ASICs were developed that are custom built just to calculate and encrypt these blocks. As a result, the ledgers have moved from individuals to companies and these miners are a good starting point, atleast for now, to invest in.
As I continued doing research in the space, couple of weeks ago, I came across a Canadian company that was about to get listed on the TSXV. I decided that I was willing to break all my rules and take a gamble on this one. My rule for investing has been to completely understand each investment and understand the full financial picture before I put some money in. With the IPO coming momentarily, and the details a bit murky, I figured that I had to act fast and hope for the best. I was willing to lose every last penny with this speculation.
As it turns out, there is a lot of pent up demand for investing in anything related to blockchain and I’m glad to have picked up some shares at a good price (the stock price took off right after I bought it). Time will tell if this was a good decision. For now, I will leave you with this introductory video about Hive and Genesis. For more info, check out Hive Blockchain Investors Presentation.
Full Disclosure: Long HIVE.V. Our full list of holdings is available here.