Bull Run Looming, Do You Know Which Market (and about this Microcap)?

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Monday, April 24, 2023

Halfway through April the Dow Jones Industrial Average was, knock on wood, on a roll.  The blue chip index had scored four straight winning weeks, a streak that hasn’t happened since Oct. 2022. The last time there was a five-week run was Oct. 2021. Things have stalled out since, but the uptrend still looks intact in the immediate term.

The Dow has been holding up after hitting those mid-April highs as traders digest mixed economic reports and a better-than-expected batch of corporate earnings. Wall Streeters had a bit of a conundrum to solve recently over weak retail sales, which faded largely because of lower gas prices, typically a good thing to see. 

On the earnings front, JPMorgan Chase (NYSE: JPM) and UnitedHealth (NYSE: UNH) topped analysts’ expectations, while Boeing (NYSE: BA) suffered after warning deliveries of some of its 737 Max planes will be delayed.

Bitcoin recently crossed $31,000 for the first time since June 2022. Ethereum topped $2,100 per coin about a week ago, a level it hadn’t seen since last May. If you ask Ethereum co-founder and spiritual leader Vitalik Buterin, the company needs to move quick to fix its scaling issues before the next crypto run. From a technical view, the rally could be starting with the recent break of $30,000 per Bitcoin.

That’s good news for Bitcoin miners that weathered what some have colloquially called “crypto winter,” a season that lasted from November 2021 to December 2022, as Bitcoin prices fell from $69,000 to almost $15,000. To veterans of emerging markets, the decline resulted in squeezed margins and a cleansing of sorts, as over-leveraged companies closed-up shop, equipment prices dropped, and stronger companies faced less competition ahead of the next inevitable rally.

BitMine Immersion Technologies, Inc. (OTCPK: BMNR) is one such company that capitalized on the depressed market, acquiring equipment for pennies on the dollar that now is ready to be put to use at the company’s flagship Bitcoin mining operations in Pecos, Texas and Trinidad. 

BitMine is specialized in immersion cooling technology, a process where high-performance computers are submerged in fluids that rapidly absorb the heat being generated by the machines. The heated fluid is pumped away from the units where it is cooled and returned to the mix. The process results in fewer mechanical failures compared to those using mechanical fans, air intakes, and heat sinks.

For Bitcoin miners, the superior cooling technology means computers can be pushed harder, or “overclocked,” a term for exceeding manufacturer’s performance standards. All of BitMine’s mining containers utilize immersion technology and solely mine Bitcoin, as the company avoids riskier digital coins. While mining is the main focus at the moment, BitMine also offers hosting services, where it will effectively rent mining equipment and services and act as the operator for a fee.

BitMine estimates that the average mining process for a single Bitcoin wastes 772 kilowatt hours owing to mechanical overheat, dissipated heat, and heat containment. Its immersion technology can eliminate up to 95% of that waste, which translates meaningfully to higher margins. The industry is at a breaking point where high-performance computing is in dire need for data center and crypto-mining cooling method upgrades. Because fluids transfer heat far better than air does, immersion tech is that solution.

BitMine has set up shop in Trinidad and Pecos, Texas because it was able to negotiate favorable electricity pricing at both locations, in the range of 3.5 cents per kilowatt hour (with taxes potentially pushing the all-in price a little higher). In Trinidad, BitMine has an agreement with a partner to co-locate up to 125 800-kilowatt containers for hosting digital asset miners on properties selected from 93 potential locations owned by the partner. 

With the opportunity to scale, BitMine now installed a pilot site consisting of mining containers with capacity of 1.6 megawatts. A similar setup is in Pecos, Texas with both places awaiting being energized to launch mining operations. 

BitMine has an impressive team led by Jonathan Bates, a veteran of the financial services industry that moved with a purpose to position for commercial operations without incurring any significant debt. In fact, Bates and his team are a model of commitment to the project, working for equity to this point. The largest investor in the company is a fund run by Bates.

In the penny stock world, this type of dedication to the company is rarely seen. Like we said earlier, a cleansing has happened and only the good companies have survived. Now let’s get ready for the next bull run.

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BitMine Immersion Technologies, Inc. (OTCPK: BMNR) Full Corporate Write-Up: Click Here.

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