Why Crypto Miners are Selling Off | Danger

hey everyone me kevin here a lot of

questions coming up about why the heck

all of a sudden the cryptocurrency

mining companies are selling off take a

look at this you've got hud 8 mining

that's down 11.8

you've got hive that's down six point

three two percent marathon digital at

the moment is down four point six seven

percent what's happening at the miners

and what do you need to know about

what's going on okay so here's the

straight scoop

this

fall didn't come particularly because

there's any kind of madness in bitcoin

selling off in fact if you jump over

here yeah bitcoin's been rotating down a

little bit but honestly we've been

sitting in this channel of around 56 uh

to 58 000 pretty regularly and

consistently here over the past few

weeks and we haven't seen hud 8 all of a

sudden drop down to like 10 or some of

the other miners drop out instead what

happened is hud 8 released their

november production update and this

raised some eyebrows

the production update indicated that 265

bitcoin were mined over at hud 8. now in

october they mined 343 bitcoin in

september they mined 303 bitcoin that is

a nice increasing trend in fact 343

divided by 305 is an increase of mining

by about 12 and a half percent however

if you just mine 265 divided by what we

mined in october you're down about

22.7 percent in production and this is

making folks question wait a minute

what's happening at the cryptocurrency

miners now i particularly love hud 8 i

don't invest in hot 8 however i've

interviewed the executives from hud 8 or

twice on the channel so you could check

that out by just typing into youtube

meet kevin hutt 8 mining

but folks

here's what the press release said and

then here's some my thought or some of

my thoughts about this and then i want

to talk a little bit about valuation for

crypto miners and why sometimes they're

susceptible to these larger kind of

drops which is pretty important to know

and understand if you're investing in

the miners uh and and i understand

people sometimes enjoy investing in the

miners because it's hard for example to

hold bitcoin in a roth if at all

possible i mean maybe you could use like

the grayscale bitcoin trust but then

again even microstrategy is selling off

a bit today down about 3.6 percent and

microstrategy isn't a minor you just

huddle right so really what appears to

be a problem here in this last month is

that hud 8 has been installing new

servers they've installed 600 new

servers which carry 2400 nvidia

cryptocurrency mining processors or cmps

now when i think of installing new

products and sometimes i think about

the the labor that goes into

making room for the new product

potentially shutting down power to

certain areas while you're installing

new product and i i wonder if

potentially we're seeing a little bit of

sort of a boo power down in production

as they're getting ready to ramp up and

actually have more production in the

future so this could just be sort of a

blip in the radar here

but it's a little bit complicated to

understand their press release and i

wish hot 8 would provide a little bit

more clarity because they mentioned here

they received and installed 600 servers

containing 2 400 nvidia cryptocurrency

mining processors but then in the next

line they say they've deployed

approximately 25 of their total server

fleet it's deployed in earning so i'm

wondering do they mean of all of the

server fleet that they've ordered

they've only got 25 percent running or

of the nvidia they've only got 25

running and does this mean we're still

going to have a few hiccuppy months over

the next few months here i've gone ahead

and sent over a tweet to the folks over

at hud 8 so i'm kind of curious to see

what they say but i do think that lack

of clarity is leading to some confusion

in the market because you already pay

for quite a premium for these mining

companies consider this

hud 8 well let me let me do the math for

you really quickly using hiv as an

example and i'll show you some of the

other ones hive digital just as an

example huddles 1 350 bitcoin with

bitcoin at a price of about 56 700

that's worth about 49.5 million dollars

but they have a market cap of 1.68

billion dollars which is about 32x that

so you're paying a substantial premium

to invest in a mining company over

somebody that's solely hodling bitcoin

and the reason for that is you're paying

for the technology they have you're

paying for the fact that you expect

their efficiency to go up that you

expect them to mine more crypto not less

and that's why this production update is

a little unnerving because kind of like

hey if you're adding servers

why is it affecting your old servers why

is the production of your old servers

going down what's changing why and then

and then that always begs the question

from investors because remember we're

paying a premium for that technology

you're paying a premium for those mining

rigs because you believe they're going

to produce more and more over time not

less now we do know that over time

mining rigs become less effective but

you're paying a premium right with hive

you're paying a 32x premium over what

they huddle in bitcoin for the fact that

they are a mining company with marathon

you're paying 10.6 times what they

huddle to market cap with bit farms

you're paying 6.7 times and with hot 8

you're paying about 6.4 times with

microstrategy because they don't they

don't mind sometimes you're paying a

discount right now you're paying about

1.1 times uh for the bitcoin that they

hold and the the easy way to calculate

this is simply look up

what uh the price of bitcoin is how much

microstrategy huddles here we'll do it

together uh microstrategy bitcoin held

we'll do that quickly and then we'll

divide it by the market cap so the

latest result as of september 13th i'm

not sure if that's the latest

information but as of september 13th it

looks like they hold about 114

000 bitcoin if we multiply that by about

56 700 that gets us to a market cap of

about 6.4

billion dollars just quick math here

or or i shouldn't say market cap a

market value of 6.4 billion bitcoin and

if we do micro strategy stock

we could see right here ah look at that

your market cap is 7 billion so you

could see that slight premium that

you're paying actually right now because

bitcoin's falling a little bit you're

probably paying divided by six point

let's quickly see what it was 6.46

so 7.02 divided by 6.46

you're paying about yeah one it's still

about 1.1 x for the amount of bitcoin

that they have and again they're not a

miner so that extra little bit is sort

of paying for micro sale error mike

uh michael saylor's strategic decisions

when he decides to maybe raise capital

with the stock and invest more in

bitcoin that's the sort of premium

you're paying at microstrategy it's very

very small because they don't actually

mind and the business isn't really being

valued at anything other than the fact

that they actually huddle crypto and so

this i think is why you're seeing the

largest sell-off amongst the miners

today because why why if you're adding

servers

are all of a sudden uh monthly

production quotas falling by 22.7 i mean

it it makes sense if maybe a little note

like by the way we had to take our

entire facility offline for a week to uh

to to you know install these new rigs

but they didn't say that

and that i think is what's concerning

the market a little bit like wait a

minute we paid a big premium for those

previous mining machines now i'm glad

you're installing new ones that are

hopefully more efficient but but now the

value of the older technology you had is

worth less and i think that's why we're

seeing a little bit of a sell down in

the mining companies today i would

before potentially buying the dip here

try to wait and see what hud 8 responds

with so follow me on twitter at realme

kevin you'll see a tweet before this

video is posted you could like it you

could retweet it and hopefully they

respond soon you're specifically looking

probably for a reply from jamie leverton

or someone else over at honey alright

folks thanks so much for watching and

we'll see you in the next one thanks

again bye