An overview of what is happening in the crypto markets, summarised by Crypto Finance AG Senior Trader Patrick Heusser in the market commentary.
Market commentary
Good Morning!
Mining reward tokens meet DeFi yield farming.
Yes, it sounds crazy, but it is actually a pretty straightforward investment. One of the biggest cloud mining platforms, Poolin, has launched the pBTC35A (ERC20) token. It features the following:
- Power efficiency --> 35 J/TH
- Electricity costs --> $0.0583/kWh
The (let's call it) IPO price of this token is USDT 100 per 1 pBTC35A token. You might now be asking yourself "What is its fair value price?"
Two of the four variables regarding the profitability of a mining pool are fixed (see above). What's left is the price of the mining hardware device (in this case the Bitmain's AntMiner S19) plus the price of bitcoin. The price of bitcoin should only become relevant when it goes below the current break-even price for mining. According to miner profitability data tracked by Poolin and F2Pool, break-even is at around $6,500.
So, what is the fair value now?
1 AntMiner S19 has a computing power of 95 TH/s --> current cost is $6,200
1 pBTC35A token represents 1 TH/s (with the two fixed variables described above)
Calculation: AntMiner price / Terahash units = 6200 / 95 = $65
The CEO of Poolin justifies this hefty premium as a convenience cost. Imagine you would need to run the mining operation yourself.
Initially, I thought this might be a nice diversification in a crypto portfolio. But after going through the pricing structure of the token, I believe the price will highly correlate with the price of bitcoin.
Read more about this topic here.
Copyright © 2020 | Crypto Broker AG | All rights reserved.
All intellectual property, proprietary and other rights and interests in this publication and the subject matter hereof are owned by Crypto Broker AG including, without limitation, all registered design, copyright, trademark and service mark rights.
Disclaimer
This publication provided by Crypto Broker AG, a corporate entity registered under Swiss law, is published for information purposes only. This publication shall not constitute any investment advice respectively does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. This publication is not intended for solicitation purposes but only for use as general information. All descriptions, examples and calculations contained in this publication are for illustrative purposes only. While reasonable care has been taken in the preparation of this publication to provide details that are accurate and not misleading at the time of publication, Crypto Broker AG (a) does not make any representations or warranties regarding the information contained herein, whether express or implied, including without limitation any implied warranty of merchantability or fitness for a particular purpose or any warranty with respect to the accuracy, correctness, quality, completeness or timeliness of such information, and (b) shall not be responsible or liable for any third party’s use of any information contained herein under any circumstances, including, without limitation, in connection with actual trading or otherwise or for any errors or omissions contained in this publication.
Risk disclosure
Investments in virtual currencies are high-risk investments with the risk of total loss of the investment and you should not invest in virtual currencies unless you understand and can bear the risks involved with such investments. No information provided in this publication shall constitute investment advice. Crypto Broker AG excludes its liability for any losses arising from the use of, or reliance on, information provided in this publication.
