December 15, 2021 -- InvestorsHub NewsWire -- NetworkNewsWire
Editorial Coverage: Volatility is a part, a necessary one as it
happens, of any market, especially emerging markets such as
cryptocurrency. That said, big swings aren’t deterring people from
investing in the new asset class by any stretch of the imagination.
In fact, people are jumping on the crypto/blockchain bandwagon in
droves. In a
survey this summer by Bakkt, nearly one-half of the 2,000
respondents said that they have invested in cryptocurrency this
year, even if only a few dollars, with more than one-third of those
not in yet saying that they are interested in joining the mix.
While volatility — Bitcoin went from $68,978 to $43,563 in 24 days
recently — is certainly prevalent, it doesn’t scare off investors
in a market that has exploded on the scene in recent years. It
hasn’t slowed businesses from investing in new technology either,
with companies such as ISW Holdings Inc. (OTC: ISWH)
(Profile) actively expanding core
offerings as it establishes itself as one of the largest mining and
hosting providers in the North America digital currency market.
Fortunately, investors are afforded an array of investment options
outside of cryptocurrency itself, with diversity strategies
available through a variety of companies and funds,
including Bakkt Holdings Inc. (NYSE:
BKKT), HIVE
Blockchain Technologies Ltd (NASDAQ:
HIVE), ProShares Bitcoin Strategy ETF (NYSE ARCA:
BITO) and MicroStrategy Incorporated (NASDAQ:
MSTR).
- ISW Holdings is nearly ready to go live with phase 1 of Pod
City, a mining complex that will pair 56,000 Bitcoin miners to 200
megawatts of power.
- ISWH has relationships with leaders in cryptocurrency mining
and municipalities, giving it a competitive edge to control
operating costs.
- Ahead of Pod City’s opening, ISWH is already showing improved
fundamentals, with 560 miners in operation generating $1.075
million in revenue during Q3.
- Pod City is expected to be fully connected in Q4 2022, with
management targeting $10+ million per month via hosting services
contracts.
Click here to view the custom infographic of
the ISW Holdings Inc. editorial.
Power Play
Cryptocurrency miners are integral to the market, as they are
the means by which new coins enter circulation. Take Bitcoin for
example. Bitcoin miners solve extremely complicated math problems
to verify transactions in the cryptocurrency. Solving the problem
results in a new data for a block, which is added to an immutable
decentralized ledger known as the Bitcoin blockchain. Each block
holds one megabyte of Bitcoin transaction data. For work
successfully mining a Bitcoin, the miner is rewarded a
predetermined amount of Bitcoin, with the reward halved when
210,000 Bitcoins are mined globally, which happens about every four
years.
There is a common thread among Bitcoin miners: high costs
related to massive power consumption. Crypto mining is a numbers
game insomuch that the more computing power used, the more Bitcoin
will be mined. The banks of computers that are running full-out
every minute of every day are energy hogs, gobbling up some 91
terawatt-hours of electricity each year as an industry. To lend
some color, that is more energy consumption than all
of Finland uses annually. Unsurprisingly, companies
are looking at all forms of innovation to minimize energy expenses
and widen their profit margins.
ISW
Holdings Inc. (OTC: ISWH), which is in the process of
changing its name to BlockQuarry, is a Nevada-based portfolio
company with primary commercial-stage operations in cryptocurrency
mining. The flagship asset of ISWH is its Pod City complex that,
when complete, will pair 200 megawatts (MW) of power with 56,000
crypto mining rigs. In addition to its mining business, ISWH is a
hosting service offering all the necessary equipment and industry
experience to customers that are interested in mining operations
without all the upfront capital expenditures.
To develop its Pod City project, ISW Holdings teamed up with
some of the best-known names in the business, including
the world’s
leading producer of cryptocurrency mining hardware and
Bit5ive, a leading global cryptocurrency mining firm. ISWH and
Bit5ive partnered in May
2020 to build highly efficient yet powerful and modular
data centers that ISWH brands as BloqPods. Pod City isn’t even
complete yet, and ISWH is reporting improving revenue. The company
employs a holistic approach to mining where infrastructure and
power turn into revenue and cash flow, made possible in part by
the ISO intermodal pods and consideration for where they are
placed, including opportunity zones.
Pod City: Phase 1 Nearly Done
It would be fair to say that 2020 wasn’t exactly the ideal time
to take on a project the scale of Pod City. Only a few months after
ISWH and Bit5ive forged a joint venture to construct Pod City, the
COVID-19 pandemic surfaced, resulting in businesses closing across
the world, effectively choking supply chains as governments tried
to stop viral spread.
This was especially challenging for ISWH, which manufactures its
BloqPods in America but sources key components globally. Each
40-foot long BloqPod contains 280 Antiminer S19J machines. In
aggregate, a BloqPod has capacity of 28,000 TH/s, which translates
to 0.1576 Bitcoin per day (BTC). Using $50,000 Bitcoin, each
BloqPod has the potential to generate $575.2 million annually. Pod
City will have 200 BloqPods.
ISWH and Bit5ive cleared the COVID-related obstacles to develop
Pod City at a rapid pace, a testament to the partners and their
access to infrastructure and mining equipment. On Dec. 9,
2021, ISWH
said that phase 1 of the project is about to go live.
Phase 1 is comprised of the infrastructure build-out to deploy 20
megawatts of power to BloqPods. Looking ahead, management sees
everything remaining on track to have 200 MW of power and the
56,000 operational during the fourth quarter of 2022.
A Prime Opportunity (Zone That Is)
As mentioned, mining companies are looking to leverage every
possibility to get a competitive edge. For ISWH, there is a benefit
for using “opportunity
zones,” distressed, low-income areas in the United States, for
which the federal government offers incentives via tax benefits for
investment to develop the area to spark economic growth and create
new jobs. On the topic of Pod City, Larry Sossamon, president of
project contractor Sossamon Construction Co, commented that the project will “create many new
jobs and new opportunities in the area.”
Relationships with governments is quite important to ISWH in the
grand scheme of things. A steward to economic growth, the design of
the BloqPods overcome some primary barriers to entry into the
cryptocurrency mining business, namely equipment, storage and,
importantly, energy. Part of squaring the energy circle is
undergirded by partnerships with municipalities that allow access
to low energy rates for mining operations.
Exceeding Revenue Expectations
As the company prepares for the first mining activity at Pod
City, ISWH is generating revenue from its other operations. During
the third quarter, revenue rose 2,435% year-over-year
to $1.075
million, including deferred revenues. It’s worth noting that
those quarter results don’t include a full three months of the 550
new miners that ISWH acquired from Minerset in August, 150 of which
came from IWSH crossing stock performance milestones. Adding the
new machines providing a boost to the company’s total assets, which
came in a $9.56 million at the end fo the third quarter, a stark
increase of 5,263% compared to the year earlier quarter. ISWH also
cleaned up its book, shaving total liabilities to 73% and total
derivative liabilities by 98% to less than $340,000.
Currently, ISWH is running 560 miners (Bitmain Antminer S17s,
BitMain S19 95TH/s and Canaan Avalons) that are housed in Bit5ive
POD5 units (a BloqPod under the Bit5ive brand). The operations are
located in Pennsylvania and managed by Bit5ive. Capacity from this
small-scale site is $6 million for ISWH, a nice supply of capital
that helps with dilution as Pod City is developed.
Regarding the subject of volatility, that is taken out of the
equation at Pod City. ISWH will earn revenue strictly from hosting
service fees, which aren’t contingent upon Bitcoin prices. Once Pod
City is completed next year and running at full capacity, ISWH
management forecasts revenues in excess of $10 million per month.
Moreover, the company will be stable with the revenue shored up as
recurring under long-term service agreements.
A Bevy of Strategies
Investors are fortunate that there are many ways to gain
exposure to cryptocurrency. Some people don’t realize that it only
takes a couple dollars to take a position because cryptos such as
Bitcoin can be bought in tiny fractions of a coin. Over the years,
access has opened up as well, with many common financial services
offering its clients to invest in crypto. Then there are miners,
technology companies, exchange traded funds and more to choose from
depending on one’s risk tolerance.
Bakkt Holdings Inc. (NYSE: BKKT), a
trusted digital-asset platform that enables consumers to buy, sell,
send and spend a range of digital assets, will soon
be offering
users and partners the ability to buy, sell, and hold
ether (ETH), which is the cryptocurrency of the Ethereum network.
Users can also send Ethereum to family and friends directly through
the Bakkt App. With the addition of Ethereum to its existing
capabilities with Bitcoin, Bakkt will offer users the ability to
access two cryptocurrencies representing more than one-half of the
total market value of all cryptocurrencies1.
HIVE
Blockchain Technologies Ltd (NASDAQ:
HIVE) reported record second-quarter numbers, and
then followed
those up two months later with record production figures
for November 2021. The company reported that it currently has 218
BTC Produced, along with $13.2 million Bitcoin mining revenue and
1.31 ExaHash of Bitcoin mining capacity. In addition, the company
reported 2,334 ETH produced with $10.4 million Ethereum mining
revenue and 4.36 TeraHash of Ethereum mining capacity. Total
revenue for the company was $23.6 million.
ProShares Bitcoin Strategy ETF (NYSE ARCA:
BITO) has been at the forefront of the ETF
revolution since 2006. ProShares now offers one of
the largest lineups of ETFs, with more than $69 billion in
assets. The company is the leader in strategies such as dividend
growth, interest rate hedged bond and geared (leveraged and
inverse) ETF investing. ProShares continues to innovate with
products that provide strategic and tactical opportunities for
investors to manage risk and enhance returns.
MicroStrategy Incorporated (NASDAQ:
MSTR), the largest independent publicly traded
business intelligence company, with the leading enterprise
analytics platform, announced earlier this year that it
had purchased an
additional approximately 13,005 Bitcoins for approximately
$489 million in cash at an average price of approximately $37,617
per Bitcoin, inclusive of fees and expenses. That purchase means
that MicroStrategy holds an aggregate of approximately 105,085
Bitcoins.
The days of $1,000 Bitcoin are long gone, replaced by a new,
steadily climbing asset class that should do well in an
inflationary environment like the United States seems to be
charting. Certainly there will be more volatility, but at today’s
prices, there is plenty of room for companies to become profitable,
especially those that optimize operations to control expenses.
These are the type of companies that thrive in a volatile market
climate, always looking for ways to capitalize when the markets
make their downward swings.
For more information about ISW Holdings
Inc., please visit ISW
Holdings Inc.
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