Mad Hedge Technology Letter
April 3, 2023
Fiat Lux
Featured Trade:
(BULL CASE FOR NVIDIA)
(NVDA), (AI), (GPU)
Posts
Investors looking at taking their investing futures by the scruff of the neck need to look no further than pouring capital into chip stock and a company that will be integral in building generative artificial intelligence technology Nvidia (NVDA).
The stock has muscled itself higher in 2023 doing a double in about 4 months.
Shares were languishing around $140 at the turn of the year, but have gone ballistic on its way to almost $280.
What was the trigger to such a short-term bull run?
Investors have bought into the hype around generative artificial intelligence (AI) applications such as chatbots, which could trigger the need for thousands of graphics processing units (GPUs) - a market that's dominated by the chipmaker.
But the stock's extraordinary rally has made it quite expensive from a valuation perspective.
Sadly, PC shipment forecast is grim as well for 2023. PC shipments this year expect to come in at 260.8 million units, which would be a 10.7% decline over last year.
Nvidia sells graphics cards that go into personal computers and workstations.
The PC market's woeful performance in 2022 - when shipments declined a startling16.5% from 2021 - led to a collapse in Nvidia's gaming and professional visualization segments. Gaming revenue was down 27% in fiscal 2023 to $9 billion as sales of graphics processing units (GPUs) used by gamers dried up. Professional visualization revenue also declined 27% to $1.54 billion.
Nvidia's channel partners were left with excess graphics card inventory on account of weak demand.
Revenue is expected to increase by almost 10% to $29.6 billion, but a gloomy forecast indicates that the restocking of graphics card inventory may not happen soon.
The headwinds in a sizable chunk of Nvidia's businesses, when combined with its rich valuation, strengthen the case against investing in the company.
New catalysts such as generative AI applications could give the data center business a turbocharge effect.
For instance, market research firm TrendForce estimates that ChatGPT may eventually require more than 30,000 GPUs from Nvidia to cater to the huge demand. Given that each Nvidia data center GPU can cost between $10,000 and $15,000, the company could generate substantial revenue from supplying its graphics cards for powering chatbots such as ChatGPT.
Also, as many tech giants are now in a race to develop chatbots, Nvidia could turn out to be the biggest winner related to this industry.
That's because Nvidia leads the data center GPU market, with a share of over 90%. That puts it in pole position to take advantage of the chatbot market, which is expected to register annual growth of 30% over the next five years.
The bottom line is that the AI opportunity could send Nvidia stock higher in the long-term.
They continue to be one of the leading lights of the tech industry intersecting across a number of leading and meaningful sub-sectors.
However, I would wait for a small dip to dollar cost average into shares because the price action has gone a little too fast and too furious in the short-term.
No private foreign capital or investment will penetrate Ukraine for the foreseeable future.
Every Ukrainian under 40 years old is now making a mad dash for higher ground to put their money in safer places.
The Ukrainian hryvnia has lost 25% of its value while artificially suppressed and this is just the beginning.
It could trigger a vicious cycle all the way to zero where like a hot potato, Ukrainian citizens try to rid themselves of local currency as fast as possible.
Like I said, there are others out there with similarly non-influential currencies, pretty much every ex-Soviet republic not in the European Union in the likes of Georgia, Kazakhstan, Moldova, Azerbaijan, and Armenia of the South Caucasus.
When you add up the population in the likes of Uzbekistan and such, then that totals roughly 130 million people.
These 130 million people, like El Salvadoreans, need to target securing alternative currencies.
For people who haven’t traveled to these esoteric places, US dollars are in high demand and hard to find and families hold on to them for dear life like a newborn child.
So, if the choices are Bitcoin or worthless paper, then between these two, the decision is rather straightforward.
Ukrainians are slowly coming to the realization that these are their options.
Recently, the Government of Ukraine has passed a law that legalizes Bitcoin and other cryptocurrencies.
The law grants legal status to virtual assets. The law not only grants users the right to operate cryptocurrencies but also defines the clear rights and duties of all market participants.
Ukraine’s government also approved the law regarding cloud services as a whole.
The bill’s goal is to create conditions for the processing and protection of data when using cloud computing technology, as well as providing cloud services and determine the specifics of public authorities’ use of cloud services, as well as more efficient use of public resources through the introduction of new technologies.
The new law will expedite the entry into Ukraine of the world’s top cloud service providers – Microsoft (MSFT), Amazon Web Services (AMZN), and Google (GOOGL) Cloud – and encourage the construction of data centers.
The Ministry of Digital Development has previously said that it planned to expand the market for “virtual assets.”
Virtual assets are divided into two categories in the draught law: secured and unsecured virtual assets.
A secured VA is an asset that verifies property or non-property rights, such as the right of claim on other objects like stablecoins, and is secured by fiat currency, securities, or any sort of offline asset.
All other sorts of cryptocurrencies and crypto-based assets, such as non-stable coins like Bitcoin, non-fungible tokens, and so on, are classified as unsecured VAs.
Therefore, it’s not surprising to find out in the latest data that the adoption of Bitcoin and other cryptos in Ukraine has skyrocketed.
Non-profit donors looking for donations are also being paid via Bitcoin.
The rapid legislation of course would not have occurred if not for the Russian situation, but either way, adoption is adoption and add another 50 million or so Ukrainians to Bitcoin’s growth story.
Eventually, Africa and South America will join the adoption phase as they also preside over rapidly depreciating fiat currency.
I’m shocked that Argentina hasn’t ventured this way yet, put them down for the next country in the crypto queue.
Even if Bitcoin is suffering a bout of weakness due to exogenous shocks, the long-term price trajectory should find a floor because of the demand for these 3rd world countries.
Mad Hedge Bitcoin Letter
July 26, 2022
Fiat Lux
Featured Trade:
(THE ART OF BITCOIN MINING)
(BTC), (ASIC), (GPU)
What Is Bitcoin Mining?
Bitcoin mining is the way in which new coins are added to the existing supply of the cryptocurrency known as Bitcoin (BTC).
These transactions are confirmed by the network and represent a critical component of the maintenance and development of the blockchain ledger.
Cryptocurrency mining is attractive to many investors interested in cryptocurrency and the most profitable are able to do it on a large scale incorporating an industrial mindset.
Granted, the units of economics of crypto mining have suffered in the short term because of spiraling energy costs.
But Crypto always ebbs and flows from crypto winters to crypto summers.
How Do I Mine Bitcoin?
Mining Bitcoin is not for the faint of heart.
Your computer must solve complicated math problems that verify transactions in the currency.
When a bitcoin is successfully mined — the miner receives a bitcoin.
One can use a normal computer that has a CPU, motherboard, RAM, and storage to mine bitcoin.
The only difference and the most important requirement here is the graphics processing unit (GPU) or the video card.
A high-performance GPU is a must if a person wants to mine Bitcoin.
Bitcoin mining is done using hardware called ASICs that is short for Application-Specific Integrated Circuits.
Another obligatory requirement is electricity for mining machines.
The largest bitcoin miners are usually found in countries with low-cost electricity.
Miners need robust infrastructure to mine mainly energy and equipment.
How do I do it at home?
A company called Compass Mining is betting that individuals will want to partake in bitcoin mining.
There’s a lucrative payout — if you’re lucky enough to mine a coin.
But the hassle of operating a mining rig can certainly cut into profits.
Compass’ new retail program will allow the purchase of a single application-specific integrated circuit (ASIC) mining rig that they can set up at home.
Mining corporations usually buy in bulk — this finally gives the little guy a chance.
Brands include top-of-the-line ASICs WhatsMiner series from MicroBT and the Antminer series from Bitmain, offering 78 to 95 Tera hashes per second and ranging in price from $8,100 to $10,400.
Profitability calculators can help you estimate your potential ROI.
Rigs are noisy and hot so it’s not for everyone.
Potential miners really need to do their due diligence if they want that sort of environment in their house.
About the size of a desktop computer tower, they can emit between 50 and 75 decibels of noise, which is roughly the same level as a vacuum cleaner or a hairdryer.
Just like the work-from-home paradigm was borne out of the pandemic, many who want to mine bitcoin, wish to do it from the confines of their couch and man cave.
The demand for mining hosting sites in North America has been outstripping supply. Encouraging bitcoin enthusiasts to set up their own operations at home is one way to relieve the pressure on existing hosting infrastructures.
China has shown us their cards by initiating a blanket ban on cryptocurrencies opening up opportunities for alternative miners.
The crackdown nearly halved the mining difficulty for the entire Bitcoin network. Miners outside China have been able to mine more bitcoin given the record low mining difficulty, raking in high revenue.
Corporate self-mining companies, such as Marathon and Riot, as well as third-party hosting sites, are facing a shortage in infrastructure to support more mining operations.
Once crypto comes back, we will all laugh at how 2022 was an aberration for the crypto world.
Mad Hedge Bitcoin Letter
December 28, 2021
Fiat Lux
Featured Trade:
(THE ART OF BITCOIN MINING)
(BTC), (ASIC), (GPU)
What Is Bitcoin Mining?
Bitcoin mining is the way in which new coins are added to the existing supply of the cryptocurrency known as Bitcoin (BTC).
These transactions are confirmed by the network and represent a critical component of the maintenance and development of the blockchain ledger.
Cryptocurrency mining is attractive to many investors interested in cryptocurrency and the most profitable are able to do it on a large scale incorporating an industrial mindset.
How Do I Mine Bitcoin?
Mining Bitcoin is not for the faint of heart.
Your computer must solve complicated math problems that verify transactions in the currency.
When a bitcoin is successfully mined — the miner receives a bitcoin.
One can use a normal computer that has a CPU, motherboard, RAM, and storage to mine bitcoin.
The only difference and the most important requirement here is the graphics processing unit (GPU) or the video card.
A high-performance GPU is a must if a person wants to mine Bitcoin.
Bitcoin mining is done using hardware called ASICs that is short for Application-Specific Integrated Circuits.
Another obligatory requirement is electricity for mining machines.
The largest bitcoin miners are usually found in countries with low-cost electricity.
Miners need robust infrastructure to mine mainly energy and equipment.
How do I do it at home?
A company called Compass Mining is betting that individuals will want to partake in bitcoin mining.
There’s a lucrative payout — if you’re lucky enough to mine a coin.
But the hassle of operating a mining rig can certainly cut into profits.
Compass’ new retail program will allow the purchase of a single application-specific integrated circuit (ASIC) mining rig that they can set up at home.
Mining corporations usually buy in bulk — this finally gives the little guy a chance.
Brands include top-of-the-line ASICs WhatsMiner series from MicroBT and the Antminer series from Bitmain, offering 78 to 95 Tera hashes per second and ranging in price from $8,100 to $10,400.
Profitability calculators can help you estimate your potential ROI.
Rigs are noisy and hot so it’s not for everyone.
Potential miners really need to do their due diligence if they want that sort of environment in their house.
About the size of a desktop computer tower, they can emit between 50 and 75 decibels of noise, which is roughly the same level as a vacuum cleaner or a hairdryer.
Just like the work-from-home paradigm was borne out of the pandemic, many who want to mine bitcoin, wish to do it from the confines of their couch and man cave.
The demand for mining hosting sites in North America has been outstripping supply. Encouraging bitcoin enthusiasts to set up their own operations at home is one way to relieve the pressure on existing hosting infrastructures.
China has now initiated a blanket ban on cryptocurrencies opening up opportunities for alternative miners before these Chinese mining operations relocate abroad.
The crackdown nearly halved the mining difficulty for the entire Bitcoin network. Miners outside China have been able to mine more bitcoin given the record low mining difficulty, raking in high revenue.
Corporate self-mining companies, such as Marathon and Riot, as well as third-party hosting sites, are facing a shortage in infrastructure to support more mining operations.
Higher bitcoin prices also mean more incentives for potential miners to flood this industry.
If Compass doesn’t seem right for you, then buying mining machines either from Chinese miners or from mining machine manufacturers through e-commerce platforms such as Alibaba and eBay could be a great option.
Individual mining rigs from Compass are expected to deliver within two to three weeks.
Mad Hedge Bitcoin Letter
September 28, 2021
Fiat Lux
Featured Trade:
(THE ART OF BITCOIN MINING)
(BTC), (ASIC), (GPU)
