by joeskunk
Several days ago, I posted a chart flagging an opportunity with CIFR, which is now up ~15% today. However, there were several errors with the chart and presentation.
Attached is an updated chart with corrections made and using the latest market data.
Many thanks to the folks who commented on the initial post and offered constructive criticism.
INTERPRETING THE CHART
Lower values on the EV / (EH/s) metrics implies the company is under-valued and there is opportunity for it to increase in value. The more extreme the discrepancy, the greater potential for a price increase.
For example, if a company is trading at 1/3 the Average EV / (EH/s) that would imply the possibility for a 3x increase in price – assuming valuations became normalized on that metrics.
UNDERSTANDING MINER VALUATION
Valuing miners on a relative basis comes down to 4 things:
(a) How much they can mine
(b) How expensive it costs them to mine
(c) Expected growth in mining capability
And lastly…
(d) How much the company is currently valued at
Put succinctly, if you can find some that currently is and will be producing large amounts for RELATIVELY a relatively low cost for the company – then that is an opportunity for growth. Production capacity is measured by hash rate. In this case EH/s or Exahash per second. The primary determinant of cost is electricity. And the value of a company is enterprise value (not share price, not market cap).
So when we normalize on these by calculating EV / (EH/s) – this should pretty clearly flag the appealing stocks in this sector. The results speak for themselves.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.