Bitcoin Miners: The HSEP Pick
There are nearly two dozen public Bitcoin miner stocks. I personally own four of them. Three of those four are among the top five performers over the last month. Which one am I adding to HSEP?
It’s been almost two weeks since I wrote The Old Miner Swap. In that premium subscriber-only piece I detailed why I moved on from Newmont Mining NEM 0.00%↑ in the Heretic Speculator Equity Portfolio (HSEP) and instead swapped into a different Gold mining stock. It’s been a prescient move because NEM is roughly flat since that exit and I’m up 8% on the new position - this new position is also beating the Van Eck Gold Miner ETF GDX 0.00%↑ as well. In what has been a difficult 2023 to navigate, this is one of the better moves so far in HSEP and I owe it to a fairly basic system.
I just went with a miner that had a better growth story and more appealing valuation metrics. That approach made more sense to me because I’m not competent enough to be able to determine which Gold miner stocks are better investments based on deposit grades or more advanced fundamental assessments. Where I do think I have more of an edge is with the Bitcoin miners and I alluded to some of the similarities to Gold miners in The Old Miner Swap:
If we do experience a radical shift in establishment structures, then it stands to reason that we’ll have both analog and digital winners. Where both of these assets are somewhat similar is in the producer category. The producers, or miners, of Bitcoin and Gold both have input costs (energy, labor, etc) and production yield. Where Gold miners have geological variance, Bitcoin miners have ASIC efficiency variance.
That ASIC variance is a bit easier for my small brain to understand and that’s why I cover many of those Bitcoin miner names for BCR and for Seeking Alpha publicly. My approach to this space has been a combination of ASIC variance and balance sheet management. So far, my analysis has worked out well as Bitcoin’s rally over $30k has led to massive returns in a lot of these public Bitcoin miners.
But there are five clear return leaders of the dozen or so public miners in this April miner rally and I’ve had direct exposure to three of them with indirect exposure to one of the other ones. Basically, you’re better off following my BTC miner picks than you are buying something like the Bitwise Future of Finance ETF BITQ 0.00%↑ if you’re looking for BTC miner gains.
So which one am I considering adding to the HSEP? Probably not the one you might expect if you follow this space and it’s not in BITQ’s top 10.
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