I went trough the financial statements for Hashchain and learned a lot about business activities of this sleepy little gem over the last couple of months. Basically they are acquiring hashing equipment from other companies that they consolidate in their canada based data centers to leverage the cheap electricity costs to have a edge over the general market. Most of their miners are mining Bitcoin, some mine Dash. Another business model is running 2 Dash masternodes.
I don't know how successful the investments in hashing equipment can be amortized. But I know that there was probably never a better time to pull this off. They pay for the mining equipment by dilluting the number of shares in circulation. This and the fact that crypto prices are depressed is in my view the main reason for the low prices of the shares in Hashchain currently.
With Bitmain another big mining company prepares it's ICO and happens to be the largest competitor in the world. This will produce a lot of publicity for any mining farm operator that is publicly listed as the valuation should be roughly equal. Smaller producers have better conditions since it's actually pretty complicated to buy large amounts of electricity at a discount. Also the mining equipment of Bitmain is reportedly pretty outdated and not much longer competitive.
The reported numbers do not include the type of mining equipment that Hashchain is acquiring, so no information is available about how future proof the hardware will be. But in a bull run every piece of old crappy hardware will make money. And here is what I think is the genius part of being a publicly listed company: you can just issue more shares to keep operating and wait for the next bull market. potentially forever.
This plan can fail because the price of shares could be further depressed but as Bitmain wants a successful ICO and as the biggest mining company with ties to almost every other company that operates in the crypto space, the next bull run should not be too far out. Right now the market cap of Hashchain is around 16 million USD while the reported purchases of equipment amount to more than double that. On top the mined crypto currencies are kept in store since the operation of the hardware can be paid for by issuing new shares while waiting for better market conditions.
Let's assume that the management of Hashchain knows what they are doing and are not out of their right mind and they are not lying in their financial statements, they are gambling but currently everything points in favor of their strategy. The company got kickstarted by selling shares for 0.07 CAD in fall of 2017. Since then shares to inflated prices have been issued to purchase hardware, effectively at a discount. In addition long running options have been issued to the management to buy shares at 0.50 CAD each within 3 years.
If the management wants to make money they have to bring the price above 0,50 CAD. At the same time the current levels are close to the invesments in the funding rounds. So everyone who is still in that stock bought at a higher price which makes it a feasible bottom. This doesn't include the short sellers of course, but they are effectively shorting Bitcoin which in my opinion is a bad idea for the time up to the Bitmain ICO.
I don't know how successful the investments in hashing equipment can be amortized. But I know that there was probably never a better time to pull this off. They pay for the mining equipment by dilluting the number of shares in circulation. This and the fact that crypto prices are depressed is in my view the main reason for the low prices of the shares in Hashchain currently.
With Bitmain another big mining company prepares it's ICO and happens to be the largest competitor in the world. This will produce a lot of publicity for any mining farm operator that is publicly listed as the valuation should be roughly equal. Smaller producers have better conditions since it's actually pretty complicated to buy large amounts of electricity at a discount. Also the mining equipment of Bitmain is reportedly pretty outdated and not much longer competitive.
The reported numbers do not include the type of mining equipment that Hashchain is acquiring, so no information is available about how future proof the hardware will be. But in a bull run every piece of old crappy hardware will make money. And here is what I think is the genius part of being a publicly listed company: you can just issue more shares to keep operating and wait for the next bull market. potentially forever.
This plan can fail because the price of shares could be further depressed but as Bitmain wants a successful ICO and as the biggest mining company with ties to almost every other company that operates in the crypto space, the next bull run should not be too far out. Right now the market cap of Hashchain is around 16 million USD while the reported purchases of equipment amount to more than double that. On top the mined crypto currencies are kept in store since the operation of the hardware can be paid for by issuing new shares while waiting for better market conditions.
Let's assume that the management of Hashchain knows what they are doing and are not out of their right mind and they are not lying in their financial statements, they are gambling but currently everything points in favor of their strategy. The company got kickstarted by selling shares for 0.07 CAD in fall of 2017. Since then shares to inflated prices have been issued to purchase hardware, effectively at a discount. In addition long running options have been issued to the management to buy shares at 0.50 CAD each within 3 years.
If the management wants to make money they have to bring the price above 0,50 CAD. At the same time the current levels are close to the invesments in the funding rounds. So everyone who is still in that stock bought at a higher price which makes it a feasible bottom. This doesn't include the short sellers of course, but they are effectively shorting Bitcoin which in my opinion is a bad idea for the time up to the Bitmain ICO.