Blockware Intelligence Newsletter: Week 150
Bitcoin on-chain analysis, mining analysis, macro analysis; overview of 10/4/24 - 10/11/24
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General Market Update
1. Market Slips Upon “Higher Than Expected” CPI
The “month-over-month” (MoM) change in CPI came in 0.2% compared to expectations of 0.1%. Risk assets dipped and bond yields ripped as the market became weary of the implications of sticky inflation: The Fed may not continue to cut interest rates as aggressively as anticipated. The market is likely wrong here – or at the very least, we’ll need to see some different data points to justify that belief.
The Fed does not set policy based on MoM CPI – they look at the “year-over-year” (YoY) change. YoY CPI came in at a 43-month low of 2.4%, which is the sixth consecutive month of disinflation. This gives Powell more than enough cover to claim victory against inflation, and continue to cut rates going forward.
2. MicroStrategy Breaks Necks
The story of the week in the Bitcoin world has been MicroStrategy. $MSTR has been on an absolute tear the past few weeks, eclipsing $200 per share. Year-to-Date returns are now at ~220%, making it the best performing large-cap US equity this year, surpassing even Nvidia.
3 . MicroStrategy NAV Premium/Discount
Many thought MicroStrategy might fall off after the launch of the Bitcoin ETFs back in January as these products might steal market share as BTC proxy vehicles within public markets. However, that has not been the case.
The market cap of $MSTR is ~$38 billion while the value of its BTC holdings is ~$15 billion. This means $MSTR is trading at a 141% premium to the value of its BTC holdings – the highest premium on record since late 2020 when it has just started acquiring BTC. It is clear that there is high demand for $MSTR due to their ability to leverage low-interest rate debt and convertible notes to accumulate BTC on behalf of their shareholders.
There is healthy debate in the online Bitcoin/finance community about how high this premium can go. Only time will tell, but much stranger, more irrational things have happened in financial markets.
4. Trillion $ Company
In an interview with Private Wealth Manager, Bernstein, Saylor outlined the “endgame” for MicroStrategies’ aggressive BTC accumulation: become a bitcoin bank. Through their BTC holdings, debt/equity instruments, volatility, and options market, MicroStrategy can effectively act as a fund or bank for investors to take a BTC position through a variety of different means. Saylor went on to say that this could make MicroStrategy a “trillion dollar company.”
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Bitcoin: News, ETFs, On-Chain, etc.
5. BTC to $62,000
While MicroStrategy has gotten the press, BTC has quietly set another ‘higher-low.’ The drop to $58,000 on Thursday was short-lived and BTC is back up 5% to ~$62,000.
6. Realized Cap HODL Waves
“Realized Cap HODL Waves” is an underrated on-chain metric. This is a blend of the famous "HODL Waves" and "Realized Price" metrics. It shows us how much of the network’s realized market cap is attributable to various cohorts of holding duration. In other words, "Who has the most chips on the table."
Notice the older cohorts (darker shade) comprise a smaller portion. This is because someone who last moved their BTC 10+ years ago did so at a much lower $ price. So while their BTC is valuable, in terms of the total value being stored in the network they attributed very little compared to someone buying an equivalent amount of BTC at current-day prices.
Peaks in Long-Term Realized Cap HODL Waves mean that most of the value stored in the network has been done so by those who are inherently much less likely to sell their coins.
Right now long-term holders represent more than 60% of the value in the network -- which bears a strong resemblance to the onset of previous bull markets.
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Bitcoin Mining
7. How to Use the Blockware Marketplace
We’ve published yet another video to our YouTube channel for our ‘Blockware Learn’ series. In this video, Blockware Head Analyst, MitchellHODL, gives an in-depth tutorial of how to use the Blockware Marketplace (stay tuned to the end for alpha on how to find low-priced ASICs).
The Blockware Marketplace is accessible world-wide, and allows anyone to purchase ASICs that are hashing right now at one of Blockware’s hosting facilities. This is hands-down the best way to get exposure to Bitcoin mining.
8. Energy Gravity
At a typical hosting rate today, new-gen Bitcoin ASICs require ~$58,400 worth of energy to produce 1 BTC. The green line shows the average cost to mine 1 Bitcoin using the latest-generation Bitcoin mining rig. The orange line shows how many $ (output) miners are able to earn for each kWh of power (input). To learn more about Energy Mass & Energy Gravity, read our report at the link below.
Read the Energy Gravity report here.
All content is for informational purposes only. This Blockware Intelligence Newsletter is of general nature and does consider or address any individual circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal, business, financial or regulatory advice. You should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.