Integrated Ventures, Inc (OTCQB: INTV) is a pure play on bitcoin mining, but market forces have pushed it to evolve and adapt to extreme bear market conditions in the price of Bitcoin. Bitcoin mining is literally becoming a story of the survival of the fittest. The biggest variable in a mining operation boils down to the cost of the mining rigs and the cost of electricity. The players that can adapt and survive in the coming boom and bust cycles are the best of breed companies. INTV fits the mold because not only does it mine but its involved in other activities that generate cash flow. These activities include; hosting, co-location, mining pools and mining equipment sales.
The most important variable cost in mining is the cost of power and INTV has come up with brilliant strategy to secure its place as a mining powerhouse with signing of a multi year hosting and marketing agreement with PetaWatt, LLC, located in upstate NY. By gaining access to the lowest price for power (under $.05/kwh), the company have procured a solution to become the lowest cost cryptocurrency player in the Northeast and possibly the nation. Most bitcoin miners are paying anywhere between $.06-12 kw/h. The PetaWatt's capacity of 120 MW has the capacity to power up to 100,000 mining rigs. It rivals the prices paid by miners, located in Wenatchee with very cheap hydroelectric power. In the volatile space of cryptocurrency, INTV came up with the most grounded and cost-effective model in the sector, which again not only allows them to survive a unpredictable crypto market but to deliver much higher profit margins relative to the market fluctuations. That upward shift is potentially happening as we speak.
Crypto Winter Signs of Thawing
Nigel Green, the CEO of UK-based DeVere Group discussed the state of the crytptocurrency market and declared that the recent upward break in bitcoin confirms the markets have found a long term bottom and that the “Cypto Winter” is finally over. Cryptocurency traders are buzzing about Bitcoin and pointing to the historical RSI and how that is signaling an imminent bull run. These are just some empirical examples that the overall bearish mood in cryptocurrencies is starting to change and turn bullish. On December 15, 2018 the CoinMarketCap was $101 billion off from its January 7, 2018 high of $813 billion. More recently the market capitalization has been moving over $180 billion which is essentially an 80% bounced off the lows in the past 4 months. It’s great to look at these technicals, but the essence of the story always traces back to the fundamentals. The hash rate and difficulty level are designed to throttle the bitcoin rewards was going up at an unsustainable pace last year and peaked in October 2018. It was taking an incredible amount of computing power to mine a bitcoin for very little reward. Eventually miners turned off these machines and the difficulty level and hash rate dropped for the first time in a very long time. Too many mining rigs entered the market at once and that led to the correction. Now difficulty levels and hash rates have bottoms and bitcoin is starting its new ascent. Overall, Bitcoin mining in 2018 hasn’t been as profitable as in 2017 despite an increase in overall revenue. With the network hashrate continuing to increase astronomically, miners now pay higher electricity tariffs severely affecting their bottom-lines.
Will BTC $6000 Bring on the BULL MARKET for Crypto?
There is tremendous upside if bitcoin can get traction. Right now, $BTC is sitting around $6000 holding its nearly $1500 rise since April 1, 2019. Bitcoin’s ability to maintain this trading level will bring confidence to crypto traders, especially the ones that went into retirement after a rough 2018.
Yes, BTC was nearly $20k in its prime, where hindsight is 20/20 by saying it moved up too fast, too quickly. Even though bitcoin struggled throughout the year, declining from the $9000 range to the $6000 range, the biggest dagger for both crypto traders and miners came late in 2018. On November 13, 2018, BTC was $6282 and sunk an additional 50% over the next month where it hit a bottom of $3194 on December 15, 2018.
At these dismal trading levels, the cost of mining was too much and almost every bitcoin miner had to flick the power switch leaving their power hungry hightech rigs to collect dust. With BTC recovering to $5000+, miners are near a breakeven point again, while those, like INTV that can control their energy costs are profitable again.
We’d like to think $6000 is the next benchmark that will kick start the BTC bull market. We think the sideline money is increasingly gaining confidence in the crypto market again. The strong CBD, cannabis market has unfortunately become oversaturated and most seasoned investors welcome a sector to become hot again--thus the crypto market. If we can see $6000, don’t be surprised to see traders of old jumping on the bandwagon again, inflating stocks and coins to new 52 weeks highs as the money shifts from sectors like cannabis back into crypto.
How long will the bull-rush last is the question, but we do know that investors are ready to pounce on the opportunity when it arises, which many are betting will be sooner than later.
5 Ways INTV Can Survive the BITCOIN Bear Market
Securing Competitive Electricity Rates. By partnering with PetaWatt, Integrated Ventures will have access to reliable power source and low pricing structure.
Generating Cash Flow via Hosting, Mining & Revenue Share Services. Integrated Ventures intends to generate significant revenue through hosting and revenue share services.
Locking-In Record Low Hosting Rates on Long-Term Contracts. Integrated Ventures’ access to low cost power will allow the company to offer the most competitive hosting rates in the industry, spiking demand for long-term contracts.
Implementing “Plug-and-Play” Container Solutions. Integrated Ventures will offer access to mobile mining containers for ASIC and GPU miners, creating a “WeWork” -style mining option for those seeking hosting space. Initially, this modular structure will be used in-house to control ramp-up and ramp-down as coin prices fluctuate.
Purchasing Discounted Mining Rigs from Secondary Markets. Integrated Ventures will keep costs low by purchasing equipment on the secondary market, a strategy that was not possible when the market was in its infancy.
Long Term Power Contracts
Without a long-term supply of cheap power, a miner cannot sustain operations through the lean times. Luckily for INTV, with newly signed agreement, power expense will represent approximately 40% of the overall mining cost while those at .09 KWh its nearly 95% of their cost. For those miners with rates at .10+ they cannot continue to mine even at the current rates of over $5000. This again is where INTV has such a huge advantage while they can gain 225% vs power, someone at .095 is breaking even, thus in a bear market where bitcoin is $3-$4000, INTV can still mine for profitability while others have to stop mining to avoid losses.
For INTV this is a blank slate for them to build the ideal mining operation. No existing miner is better positioned than INTV. Low power costs allow them to lock in long term hosting contracts creating that all important stream of revenues.
For Integrated Ventures, many of little mining companies have shut down or adapted to the bear market by shifting company focus into a different sector such as gaming or cannabis. For the big boys that weathered the storm as INTV did, when looking at the grid above, we find just how much potential Integrated Ventures has versus its peers.
Its Megawatt capacity sticks out like a sore thumb, as HVBTF (Hive Blockchain) worth in excess of $175m has just a little over half of INTV’s power potential and 19% of their current rig capacity, yet Integrated Ventures is only 1/100th the valuation of HIVE.
If you continue to compare and contrast INTV’s potential to the other competitors, one can see, that if crypto gets hot again, not only are they undervalued amongst their peers in this sector, in conjunction with the biggest upside potential, is a recipe for success investors may want to jump on.
The recent market pressure is related to the conversion of 128k convertible note and stock sales by investors, related to two M&A transactions, that occurred in summer of 2018. Management clearly has a unique vision, a wealth of experience, and is executing their business plan. INTV is poised to expand operations at the perfect time in the business cycle using the ideal bitcoin mining model of purchasing discounted mining rigs, hosting, and locking in long term collocation contracts as the price rises. INTV is morphing into the lowest cost producer of cryptocurrency with the greatest capacity. They are poised to become the market leader by the end of this year if they simply operate a just one fifth of PetaWatt's capacity. Their business model is designed to survive a bitcoin meltdown yet profit handsomely if it rises. Relative to their peers their market cap is extremely undervalued, and investors are simply not pricing in what the new low cost power structure will look like with a newly signed hosting deal.