Since October Bitcoin has rallied an impressive 87% from $4385 to over $8200 at the time of this article. Over the same time MGT Capital Investments (MGTI) the largest publically traded bitcoin mining stock has plunged 40% from $2.84 to $1.70. Although Bitcoin mining has been more profitable the company’s debt might be weighing the stock down because the stock has been unable to make any forward progress despite numerous new highs in bitcoin. Up and coming rival Integrated Ventures Inc. (INTV) is up only 2% over the same time period but up an impressive 100% since bitcoin bounce on November 13th 2017. Since November 14th Bitcoin has bounced 47% from $5865. It appears that INTV has some catch up as Investors flock to this stock as a pure play on bitcoin mining stocks without the cloud of leverage overhanging MGTI.
On Wednesday November 22 before the Thanksgiving Holiday INTV came out with a business update that debuted the launch of their 65 unit mining operation. The company’s core focus seems to be on bitcoin but it is also mining etherium and etherium classic. It also unveiled it plans to roll out 190 rigs generating in excess of $1.2 million in revenue. At the time of the press release on Wednesday it’s worthy of mentioning that the market capitalization of the company was slightly under $1.0 mil and thereby trading at a discount to its future cash stream of $1.2 million assuming no price appreciation in bitcoin.
The reason for the price move in INTV could be that investors realize that with no debt the company can hold bitcoin unlike its larger rival and can experience the upside price appreciation of the asset. With INTV’s almost pristine balance sheet with only $9750 in debt it’s not hard for investors to see that they won’t be forced to liquidate bitcoin to handle operations. The overhead of the operation is nominal and the company has plans for expansion to a 10,000 SF operation in the near future. Now the goal of INTV as stated by Rubakh, CEO of INTV is “to become one of the largest U.S based mining companies.” While this seems a little early to make such claims there clearly seem to be signs that this stock is firing on all cylinders. Investors may want to watch how this stock trades in comparison with bitcoin.
MTGI has a pretty impressive operation with $5.0 mil in assets and $3.5 mil in book value but it does have significant overhead costs and some operation issues to work through. From its last press release on November 9, 2017, CEO Robert Ladd stated “we have sourced sufficient power to accommodate the 170 rigs not yet deployed, as well as the 3,650 rigs to be delivered over the next several weeks.” Given no update to that comment investors may be taking a wait and see attitude with the stock. Power supply and management is an essential component to bitcoin mining and investors may be diversifying into INTV as they await MGTI’s next update.
MGTI has an $80 million market capitalization versus a $1.6 market cap of INTV. MGTI seems to be extremely well capitalized but when you look at the net assets of MGTI of $5.3 million versus the $500K of INTV it beg the question on why INTV isn’t significantly higher because INTV is 1/10th the size of MGTI’s assets. Investors might start asking why shouldn’t INTV be 1/10th the market capitalization of MGTI or roughly $8.0 million. If INTV reached an $8.0 million market cap it would put the stock at roughly $1.00 per share. These two publicly traded miners seem to be in a horse race it looks like it will come down to execution. INTV CEO Rubakh said “the team has been flawlessly executing while running at full speed to launch bitcoin mining operations.” The contrasting view from Robert Ladd is “While power availability (in large part caused by unprecedented demand from the emergent Ethereum market) has delayed our deployment.” Bitcoin mining operations need funding, power, and execution. It seems like INTV might be one to keep an eye on. Sign-up for continuing coverage on shares of $INTV or $MGTI stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $INTV or $MGTI, either long or short, and we have not been compensated for this article.