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Bitcoin created a hype towards the end of 2020 as hedge funds and many millionaires started to take an interest in crypto. This bubble started in October 2020 and is now closer to its end. In this bubble, the price of Bitcoin jumped over 450% and has now more than halved from its November 2021 high of $80,000. This decline was expected, as the crypto has yet to enter mainstream currency. Additionally, liquidity is drying up as inflation and interest rates rise. But a lot has changed since the 2017-18 bubble.
Investing in the Crypto Revolution
Bitcoin has become a digital commodity instead of a GenX trend. Many companies recognize crypto as a medium of exchange. The only thing holding back the crypto revolution is a robust ecosystem and energy efficient crypto mining. Over the past five years, many startups have emerged and are working to build a crypto ecosystem. Tech giants like Microsoft and You’re here work with several crypto-related startups. Elon Musk said Tesla could start accepting Bitcoin once crypto mining becomes more environmentally friendly.
There are two ways to do this.
Crypto companies can either develop cryptocurrencies with energy-efficient mining techniques compared to Bitcoin’s proof-of-work model, which requires significant computing power, or power Bitcoin mining with renewable energy . Although there are many new energy-efficient cryptocurrencies, none could replace or come close to Bitcoin. Therefore, most crypto mining companies mine Bitcoin or Ethereumas they are more widely accepted in the crypto world.
Hive Blockchain Technologies (TSXV:HIVE)(NASDAQ:HVBT) is one of the oldest crypto mining companies that powers all of its mining operations from renewable energy.
Why am I bullish on Hive in the crypto revolution?
Looking at the crypto revolution, I expect a time in the future when crypto becomes a widely used currency. At that time, it will trade like a commodity. Commodities are cyclical stocks because market demand and supply determine their price. Producers or miners have no control over the price. Therefore, they compete on cost. After each rotation of the up and down cycle, high cost producers/miners exit the market (acquisition, bankruptcy, etc.), and only the most efficient remain. This is how the market becomes more efficient over time.
Bitcoin mining is becoming more complex and expensive as more miners join in. Unlike aluminum or copper, Bitcoin mining is not limited to geographic location. The competition is therefore strong. Hive has a low production cost and expands its computational capacity to mine as much Bitcoin and Ethereum as possible. Being an early miner, it has a cost advantage over other Bitcoin miners.
Besides the cost of production, environmental concerns can immediately halt crypto mining. The world is struggling with global warming and climate change is impacting economies. The need of the hour is to reduce CO2 emissions. The use of electricity from fossil fuels for crypto mining has raised many eyebrows. Hive solves this problem by using 100% renewable energy in all of its facilities. Any change in environmental policy will not affect Hive’s operations.
Hive is exposed to BTC and ETH prices and attracts ESG (environment, social and governance) investors. Hive has also invested in startups that are exploring various blockchain applications.
Hive performs a reverse split to efficiently allocate shareholder capital
Shareholders benefit when the company’s stock is not too diluted. Hive has reverse split in a ratio of one to five, which means that all five actions of Hive combine to become one action. This split reduced the number of shares outstanding from 411.2 million to 82.24 million and boosted Hive’s stock price above $5 per share.
What crypto needs at the moment are institutional investments, as this will help capture a wider investor base. Hive has strong fundamentals and a market capitalization of $415 million. He did this stock consolidation to attract institutional investors, especially mutual funds, which have policies that state they cannot invest in stocks below a minimum price.
My opinion on Hive
Hive is moving in the right direction to improve and grow its operations and protect shareholder interests. Give stock time. It can not only thrive until the next crypto uptrend, but also grow over 400% as BTC and ETH prices rise. It could convert $1,000 to $5,000 in the next crypto boom.