Top 5 Bitcoin Miner Valuation Metrics | Bitcoin Stock Valuation Analysis | Latest Stock News Now

Intro Compass mining makes Bitcoin mining accessible to everyone start mining in as little as 48 hours with our TurnKey Hardware online and Mining directly to your Bitcoin wallet within two business days find out more at compass mining. and get started now hey miners welcome or welcome back to the channel MCN money the new home of power mining analysis in today's episode Anthony power and I have a real doozy for you we've brought along five key valuation metrics to help you better evaluate compare contrast the Bitcoin mining stocks that you invest in we've got a lot of data tables and charts to get through in today's video but before we do please take a second smash the like button you guys it's free to do it helps me out in a big way Anthony loves it if you're not already subscribed MCN money feel free to join and let us know in the comments section below how you're feeling about the Bitcoin mining sector overall if you use any of these metrics yourself when you're doing your own due diligence and your price target for Bitcoin in the final few months of 2024 now with that being said let's get into today's [Music] episode okay guys so that's right today's episode action-packed for you Anthony's brought along some of his famous tables and charts we're going to be talking valuation metrics five key metrics specifically Anthony that you use uh to better understand these companies and really compare and contract the valuation of each which is getting I would say more difficult by the day as these companies continue to evolve and grow uh now this is really stemming from an article you put out for Compass this week um so you can talk to that in a second here but this is one of the reasons we're so excited about this partnership with compass on the channel uh you've been publishing for them for quite some time now Anthony I think over 80 articles and this is the most recent example of really this uh synergistic partnership hey absolutely um started back in April 2022 and I signed up originally because I wasn't sure about you know if I could write articles um I'm an accountant by qualification and um I I'm more happy producing numbers and that's why people probably know me more from my tables which I've been putting on X forly Twitter for the last three or four years um but I started write articles back in April 22 and I signed for three um because you know there's no way I was thinking it was a long-term thing I thought it was just like a you know just a guest writer and at the moment I think we're heading probably close to about 85 articles in the last um two and a half years so um and the great thing great thing is is is um they haven't actually G given me a title to write about so all 85 articles in my own articles I I do a monthly article on all the miners which I think I'm probably the only person in the space that does that so I Do cover all the uh the monthly operational metrics and I think that's what got people interested you know three or four years ago I was doing this when I started just with like six of the miners six or seven of the miners the miners from 2021 and it's just grown and at the moment we're covering 15 16 miners now so we're getting probably more than half of all the total listed miners in North American certainly all the all the the big and well-known miners so yeah it's been a it's been a um an interesting Journey uh with compass great work in relationship with them um you and and they're always you know really Keen to promote the Articles they publish them so that gives me an Access to get the Articles out there so more people can read them they go on various social media platforms so they go on LinkedIn they go on X and then Compass also release them through their social media and also includeing things like the newsletter um again all our articles are on the uh the power maning analysis website so people can always go back and look through there and and you can also go via the compass Manning website they've got their own website and they have a compass content part of the website so you can go through there and have a look at not just my articles but there are other writers for Compass um and other various bits and pieces they do podcasts and uh you know a lot more than just just just me at the moment Balance Sheet Extract yeah it really is an excellent source of content and education which is exactly what we're about as well Anthony uh interestingly enough any kids listening out there you got to follow your dreams this is an an accountant who failed English class that is now a published uh writer and author in some of these top Publications so Anthony uh congratulations a lot of times very difficult to make the transition from numbers to uh to written and I know that firsthand so great that we can get that uh information out to the public and even more great that we can talk about it on our own podcast today so the article went out uh I believe yesterday or the day before Anthony talking about five uh valuation metrics to use for the Bitcoin mining companies now you've looked at 16 miners in this table so the way to read through this you guys is you've got a robust balance sheet extract really any number that you would want to know about these miners listed in this table so we can walk through that first I'll put it up on the screen feel free to pause at any point here you guys and then we'll talk about these five metrics that you can use to better understand the numbers on this table so Anthony with that being said uh I'll throw up the balance sheet extract and why don't you walk us through what we're looking at here yeah so you know the some of the key things to look at is you want to make sure that the in the current climate and we've talked about this the Bitcoin price you know has come down from its highs in March and and again in when it got to over 70,000 in June um know now hovering 57 58,000 as we speak today um the fact we've had a harving in April means that the uh the hash price I.E the revenues that these mining companies are able to achieve on a day-to-day basis has been cut really short I mean preh harving uh most of these min achieving something like $110 per pet has per day so for every amount of pet has on the global Network they're probably getting about $110 we've seen that dwindle now down to about $40 uh per petahash per day so that's a significant drop um and so margins are being squeezed and therefore you want to make sure that um you know key to that is how how these um current miners can operate in the current in the current climate I.E can they meet their immediate requirements so by highlighting a company's current assets and its current liabilities you're letting people know um can they meet all their obligations over a period of say the next 12 months and so those are very important uh metrics to look at there and from that you determine like what we call the current ratio and we'll go on to that in a second you also want to know from a valuation perspective if I'm investing a dollar in one of these mining companies how much am I getting in terms of value from their assets that they hold on the balance sheet so we can look at like the net assets of a company and that's looking at all the you know the the the the the money they hold all the mining machines the facilities anything that has a value and then take away from that anything that is a liability so the net assets of a company is effectively what what you're getting so if you're investing $1 in a company you know uh what will you what will you get in terms of assets and ideally if you're investing a dollar in a company you want to try and make sure you're getting sort of like a dollar in return unless there's a premium for that and then you need to understand why you're paying a premium for your share so if you're buying a share at say $1 but the actual net asset value um um per share is is like you know 50 cents it means that every dollar you're investing you're getting 50 cents of asset so you're you're paying a 50 Cent premium you need to understand why you're paying that premium so that's another sort of like a line in the balance sheet that you should be uh looking out there um obviously the the value of a company market capitalization is the is is a is the well-known um you know metric for that but there's an actual better metric to use when you're valuing a lot of companies in the same industry and that's the Enterprise Value and the Enterprise Value does start with the market capitalization it starts very much so with that and then it looks at the sort of the cash um and cash equivalents and for this exercise I look at Cash Cash equivalence and I look at the Bitcoin hodle as well and those get deducted from the market capitalization but then you've also got to look at any debt on the on the balance sheet and that will be um any any any debt through sort of like loans or notes plus any leases that these companies have and so from that position there you can calculate s like the total debt and then you can do a sort of a calculation based on what the debt um as opposed to the assets are of the company so if the company's got a you know a million dollars of assets and say $100,000 of debt you can get a ratio to determine the debt to to that Equity uh ratio there so that will'll cover that in in a certain ENT and then finally the last two metrics which are really important especially for Bitcoin miners is actually trying to Value what their ex aash um is actually cost in terms of a CO cost valuation effectively so if you look at the Enterprise value of the company and then look at the current um hash rate in terms of x a hash and divide that into that Enterprise Value you then get sort of like a value for each ex hash they have from a b from the balance sheet and so that's really important to do a compare and contrast which which mining companies have a high valuation which have a low valuation ation and again I also do the same exercise but instead of using the current hash rate I've used the future hash rate and I've gone for the end of 2024 because I think that's a more realistic time frame Ian we could start looking at 2025 2026 but you know let's keep it real and and let's look at what the the hash rates are anticipated to be um at the end of the year now before we go into the metrics I just want to I just want to just set um aside some of the assumptions and the actual subsequent events um that have occurred since those quarterly earnings were reduced so all the data or most of the data I've used in these metrics came from the recent quarterly earnings because that's when they issue the balance sheet so all the balance sheets for this exercise were done based on the recent quarter learnings which ended on uh June the 30th 2024 so using that balance sheet there I'm able to determine quite a lot of these metrics um the market capitalization and the Enterprise Value I've actually calculated at the date that I wrote this article which was as at September the 8th so I've used upto-date market capitalization which makes sense rather than go back to June but the um the balance sheet data in terms of cash cash equivalence and debt which are all three important parts of of these metrics that was taken from their balance sheets as at the 30th of June now to determine um the hodle values for Bitcoin and in in terms of um bit digital they have an ethereum hle I've used the valuation values of those hles based on their latest production uh reports which were as at the August of 31st and in terms of price of Bitcoin in ethereum I view September the 8th which is the same day I was able to look at market capitalization so what wherever you've got a really current number that's in the um is is open and transparent I've used it now I know that some mining companies will say um you know we increased our cash in July and in August but i' I've not took account of that because until I see it in writing to say that that's part of the balance sheet um and I'll give you a good example of that there so in terms of Tera wolf Tera wolf um will have in this position here when they release their recent earnings report they had I think 70 to $80 million of debt on the balance sheet now we know that in July they repaid that debt there was a big um update come out and and shareholders would have been pleased to see that update because that's a significant amount now when you're paying $80 million a dayb if you look at the transaction that's involved in that you are you are taking 80 million from your cash so you are reducing the cash by 80 million and you are also reducing the debt by 80 million so there is a netting off effect now I've chosen chosen not to show that's in um this position here I've shown the debt as at the end of June so I don't want people trying to shoot me and there's reasons for that because I don't know um you know they may have raised uh money through an ATM post uh the 30th of June to pay for that and so it's more clarity required before I start including those numbers so I try to be as transparent as possible but I've given the assumptions and some of the subsequent events and same will apply to course scientific as well and cor scientific is um is an interesting one because effectively they only came out of chapter 11 on the 24th of January this year and when they came out of chapter 11 there was so many caveats around balance sheets they' issued um not one set of warrants but two sets of warrants so they issued a cause W warrant and a CA Z warrant now um those warrants that was still in in uh still not um exercised at the end of June are shown on the balance sheet as effectively a liability so they have a value and they're shown as a liability so really um I would um I would not pay as much attention to the course scientific numbers in these metrics because they'll make them out to be probably worse than they really are and we're hoping that the next set of quarterly numbers will provide a more accurate financial position of the company because as I say there's a they've actually done a lot of um reducing debt and um increasing debt effectively since the last uh earnings report in terms of they they've repaid 260 million of notes they've took out 460 million of new notes at a low percentage and basically reduced all the old debt so it you know we we can you know take take the you know take that into consideration when you're an anzing these numbers in this report here they are only accurate as at the information that's out there I would say that cuse position is far better in terms of all their updates than we're showing here now so I don't people running for the hills when we talk through some of the metrics and realize hang on Anthony you've been saying for weeks about you know core scientific going to be the highest market capitalization and yet in here it's it's not looking as rosy but there are reasons for that and we'll probably talk a little bit more as we go through yeah I'm I'm sure we will it's nice that you list all your assumptions there and as you say uh a debit and credit for Current Ratio every transaction as I've learned in the accounting world so with that being said Anthony the first uh graph I guess that we wanted to look at is the current ratio so as you just mentioned this basically looks at a company's availability of their current assets to pay pay current liabilities within the next 12- month period all of these companies are in a great position for the most part and you've talked on the channel previously Anthony uh in some situations you may actually want this ratio closer to one to actually utilize that cash uh rather than having it on the sideline now we understand for some of the miners uh Riot is a great example with some of these power contracts they need to have a lot of cash or Bitcoin uh in the bank and that's part of the obligation so hopefully you can talk through that in a little bit more detail Anthony but uh current ratio is the first one here yeah so current ratio as I articulated earlier looks at all those um you know because it provides that insight into the short-term you know Financial Health and liquidity of each of the companies and uh you take the current uh assets of the company you divide by the current liabilities and that gives you a ratio of how easy it is for the company to meet its obligations and so if we look at the um the table there um we can look at um uh bit digital now bit digital um you know have literally zero debt so you know there's a I think they've got a few small leases it's not it's not a a big amount at all no significant um debt for borrowing if that makes more sense so in terms of their current assets um divided by their their current liabilities they've got 21 times more assets to cover their liabilities over the next 12 12 months so you know it doesn't matter where the Bitcoin price ends up bit digital is sitting actually quite well at the moment and then you've got a number of miners like clean spark iron and Cipher uh and riots and Hive all over well over seven and so seven times you know your your current liabilities is again it's a really strong position and to be honest with you you you'd argue that sort of 14 of the of the miners in that graph there are actually one and we look at one as the fact that you know if you're above one it means that you can cover your immediate liabilities without Reliance on anything else so that's that's under good position saluna is slightly H below that and Griffin is um is significantly below that but again there are some sort of like you know there are caveats so as as much as like um um you know as much as they it might appear that they might struggle to meet their short-term obligations you know they may be and we know that Griffin and Salona both operate efficiently um both have have tapped into really cheap energy um and so you know if they're able to sort of like you know um you know they can turn over you know uh you know the inventory that within the company and you know access um other types of liquidity to keep them on track there so you know I don't see it as being a major issue one could argue arue effectively that actually bit digital is not utilizing its assets as much as it should be because if you got that amount of assets more than your liabilities and we know that at the end of August they had uh in the region of $216 million of um cash and Bitcoin and ethereum holdings 216 million and with zero debt that's a significant War chest now now you know some retail investors might say well what's the plan to utilize that there it's great having it there are there some opportunities that that come along where you can sort of like maybe um look to maybe buy a facility so that you can deliver high performance Computing hosting in your own facilities so that may be a reason why bit digital have got a significant War chest just in case Anthony quick question on that bid digital has a lot of that ethereum holding stake would that be considered uh being used or not being used I guess in this in this metric um so so from a staking point of view it would really depend on on um if it's so we look at shortterm assets as those that can be liquidated within a 12-month period so if if the ethereum can remov from stake and liquidated within that 12-month period it would count towards theirs but I mean these are taken from their um from their account so the current liabilities and current assets are taken from the balance sheet so in in terms of what a current asset is it's an asset that can be liquidated within within 12 within 12 months and and one other question for you Anthony you talk about uh the ability of these companies to withstand a a draw down in the price of Bitcoin for Industries like uh say gold mining or oil and gas or Bitcoin mining that are very commodity price focused would you want to have a higher current ratio um as more insulation in in case of an underlying deterioration in in the price of the asset I think you know you I mean you'd want to you you You' maybe want to have it slightly higher than one but you I I I think to the extent that some of these are sort of like you know um 78 and in bit digital 21 um that might be you know a stretchy far but bear in mind what you're you're looking at some of these companies so look at that top five there they're all sort of like equally looking to grow in terms of either hash rates or in terms of high performance Computing so having that abundant amount of current assets available gives them the opportunity to move very quickly and if we look at um um you know recent updates from the likes of you know Iron and clean spot where they've gone in there and they can make orders on miners they can buy sites um really really quickly Cipher as well just just bought a 300 megawatt site for you know potentially for HPC hosting when you've got a a a great balance sheet to do that you can move really quickly we talked about the challenge for some of the smaller Miners And if you look at the that current uh um uh table there the the the sort of like the three at the bottom sat saluna and Griffin are the three or three of the smallest miners in there so you know we' talked about that before we even even looking at the sort of the balance sheet the challenge is is is how do these grow so you know we we've looked at clean spot there continue to grow hash rate iron you know just you know just achiev 16 x has going to 30 by the end of the year Cipher having a massive um increase next year Riot we know they've got a big increase there so they're all operating Hive want to be you know have a bigger HPC uh business and the one they've got at the moment so again all moving in the right direction and and this ratio sort of like here highlights or supports um that sort of methodology what they're doing there but um to as I say the great majority on that sheet there are you know effectively covered um and you could you could have an equal and opposite argument as to Griffin and to be bit digital as to why one is so low one is so high and the nature of the industry at the moment so it's not it's not all doom and gloom I would be a obious slightly cautious of Griffin only having effectively 0.13 assets to cover their liabilities um over the next 12 months and we have raised that with um uh Rob on on on the on the podcast but things move very quickly in Bitcoin mining circles and he's had so many um uh looked at so many opportunities and um you know I think 20 to 25 um you know letters of Interest so he's working through those there and we'll see what happens in the in the next quarter so yeah very helpful Enterprise Value (EV) / Net Assets (NA) Ratio appreciate you walking us through that one Anthony now next up we have uh Enterprise Value to net assets so you've already walked us through how to calculate Enterprise Value as a function of market cap this one if you look at the table here we've really got bookends Riot on one side Tera wolf on the other quite a disparity between the two so walk us through this one Anthony what are you looking for in terms of this number ratio yeah so again this is this is about how much I'm going to invest my dollars and what return I'm going to get in terms of net assets so this one here quite clearly shows Riot if you if you were to invest for every 28 cents you invest in Riot you're effectively getting $1 of of net assets so um that's really that's a really important um really important thing to to understand um you know um you know that that that that anything below one gives an indication that potentially the this company is is undervalued and so um it's worth you know it's worth looking you know more than half that the miners in that list there are are under W under valued there and then we look at again we go and look at the ones towards the right hand side of the graph and we've got Tera wolf at 3.6 so if you're investing $3.65 in Tera wolf you're effectively getting $1 of asset for that and we've already discussed um on many podcasts recently that their valuation may include a premium on the grounds that subsequently they could be announcing you know a HPC deal that will um warrant that premium so you know it's it's it's you know that's certainly um you know a good enough reason we've talked about the likes of ter wolf and Cipher being possibly um either or being the next minor to announce something along a similar type of contract deal that the one that core scientific has in place there someone with a either a big client or a hyperscaler and bear in mind I think Amazon are located near the uh terol facility at Lake Mariner so so you know opportunities all around there but we just need that announcement so terrible share price in recent months certainly in 2024 as as has done better than literally every other Mining Company in terms of um you know it's it's been green throughout the year and it was I think last time I looked it was 80% up year to date and the majority of miners are down year to date so ter wolf has been the one that stood out core scientific again another one that's that's done there but you know we we've talked about core scientific so often we we we should be wearing bloody core scientific t-shirts I think at this rate and hats and banners and stuff like that but they've got the contract that everyone else wants so we can't hide from that it's just a great position to be in um so I i' I'd sort of like bear in mind when you look at ter you think oh it s looks overvalued at first glance it does but read into the number read into the fact that why that share price has had some activity listen to Patrick um on the various podcasts that we've done and he's been on various spaces meeting Patrick flurry is the CFO of Tera wolf he's one of the most transparent um directors in the space and um he will you know he will you know he will he's answered all the questions he's been you know sometimes I'm like you know taking a back at how transparent he is and he made no bones that you know they're looking to you know to to increase HPC um uh hosting next year um at the expense of not increasing their Bitcoin mining hash rate whereas you know most miners are still trying to increase the hash rate while looking for HPC but they've literally said nope we're going to go to 13 just over 13 by the end of the year which was our original Target but next year the focus is on HPC so that's um that's where people sort of need to sort of have that balanced approach there look at what's happening there because core scientific have actually more liabilities than their assets that's why they're not in this graph um you know they've got you know because they came out of chapter 11 um it was a negative figure so you can't have a negative figure in this particular ratio here it would be um it wouldn't be it wouldn't be appropriate but we've explained why core Scientifics got a negative figure and actually as every quarter happens in the future now the only thing that will happen with core scientific is every quarter it will get better as more and more shareholders exercise those warrants and that cash goes into the company and they can use that cash to grow um to you know to do things you know maybe slightly quicker look at more opportunities um it's all positive on on that Cipher core scientific it will it will certainly improve um you know more capitalization and and the market once the revenues start coming in from that contract next year you know at the rate of over 400 million a year then you'll start seeing some um you know that should really impact the share price as well from where it is at the moment Compass mining is your trusted partner in Bitcoin mining whether you're Debt to Equity Ratio investing in one machine or thousands our customizable Solutions are tailored to to meet your needs we are your experts in Bitcoin mining offering a platform where individuals and businesses can purchase Hardware host machines and access a range of ancillary Bitcoin mining Services we also specialize in large-scale site development and data center operations discover more at compass mining. and see how we can power your success today yeah most definitely appreciate the context on core scientific that was going to be my question as well is is what happens if it's a negative ratio now next up third chart here we've got uh debt to equity ratio now this is displayed as a percentage again a big spread between the miners now interesting to get your thoughts here Anthony because last cycle we saw a lot of the publicly traded miners take on a lot of debt that was ultimately what led to the demise of many of them got cor scentific into some trouble Tera wolf was in trouble uh there was a lot of miners that were heavily loaded with de entering last Cy or sorry exiting last cycle now this cycle we've seen the ATM use quite a bit to fund growth and capex so curious to get your thought on the debt to equity percentage uh what's a healthy figure or range here and and any context you can add yeah you're quite right 2022 highlighted a number of miners that either went into chapter 11 or literally about to go into chapter 11 so core scientific actually went into into chapter 11 and spent 13 months there re reassessing their position and negotiating with all their creditors then you had the lights of Argo blockchain who actually announced via a facts that they gone into chapter 11 um pre preempted it really and then they they they sort of like took it back within hours and said oh we're not going into chapter 11 someone someone pressed the button in advance there um but if you look at that table there um Iron defaulted on loans um that they couldn't afford to repay back to to when the value of the um mining machines was considerably less than the debt so they defaulted and and asked naig to to recover those machines um and look at their position now you know they're in sort of like you know first position they have got zero zero zero debt you know I think it's I think it's less than one it's it's about just over 1 million in total amount and that's again it's a small lease so um you know a lot of these miners will have building that they their least buildings and so you know that is a form of debt um on on on the sort of like on the balance sheet there another one that Springs to mind if you remember bit Farms so bit Farms back in the sort of like middle of 2022 had 160 million of debt on the balance sheet they're now only showing 4% of total um debt to to um Equity uh ter wolf had 100 had well over about 130 million at 1 point they're now looking in a in a in a better position and actually that position there in actually includes the debt that's on the balance sheet as at the end of June so um their debt to equity ratio will be far better than that now it probably uh you know in that sort of clean spot Riot position there so um even at 22% they're vastly improved since uh since since June the 30th they've got no um managed debt on the on the actual balance sheets they'll probably have some small like leases and things like that but it's it's it's small amounts and then you've got the likes of uh Hut now bear in mind um you've got two the merger of two companies there so you know when hut8 merged with usbtc um hut8 itself didn't have a lot of debt but didn't have a lot of access to SES and power had a nice um balance sheet in terms of Bitcoin hle over 9,000 and usbtc had the opposite they had lots of access to sites lots of access to power based in the US but they were really struggling in terms of cash flow and in terms of um you know they had debt on their balance sheet so when there was a merger the one company then has um effectively um you know takes on on the debt of you know of of both entities and so they have got quite a bit of debt on the balance sheet I think it's over 300 over 300 million so you know not a small amount but again uh 55% so you know um you know it's manageable uh saluna at 60 sat technology at 99% so sat Technology's debt is effectively um about the same as it's um as it's as it's as it's uh Equity at the moment so that's a sort of like um you know a challenging position to be in um and and and again it's a small minor so you know we look at the market capitalization of Sato it's probably in that sort of 16 17 18 million range um and you know that's where the challenge if you want to grow and they've you know they've used uh a loan to purchase mining machines some s20 ones to grow hash rate you know they've not got many levers to do it they have got a small amount of hoddle so you know um they do have um you know a hoddle in place there and they've got cash at the moment so they've got just under about 3 million at the end of August in terms of Cash Plus hoddle but again you know you're looking to grow it's not a significant amount so you know that from their point of view um now that's going to be the challenge how do they do that and we talked yesterday on the podcast about some of this maybe merg and acquisition maybe a way forward for some of these miners um to do that but um you know most of the miners on there looking really really good I mean anything you know certainly bit dear and Below there is De work's really really um you know uh strong POS position and what will happen is we you know we've already seen it with uh core scientific that announcement of that contract has enabled them to go to the market and and get 460 million effectively of loans or notes for 3% interest you know a lot of these miners bit Farms were paying 17 18 19% on some of their loans back in 2022 so 3% that's great that's a great you know EV / Current Hash Rate you want that sort of debt uh marathon 2.25% on the 300 million they've borrowed they've converted most of that into Bitcoin itself so they're they're sort of like trying to follow the micro strategy um textbook of of building your hodle and getting the premium valuation of the company that way so um but as I say majority of those companies um in in in in a good position from a debt perspective yeah interesting bring up Marathon I noticed they just hit their 26,200 coins uh or 26.2 miles is the equivalent of a marathon and I know Michael sailor was bugging Fred uh theal about that down in Nashville so I appreciate you walking through that one Anthony uh very nice to see these companies able to refinance debt at those low interest rates two and a qu% is uh is unheard of that's I guess the best we've had even on the residential side as long as I I can remember now the next table here talks about Enterprise Value once again so that's the core metric here as opposed to market cap this time comparing it to current hash rate now interesting observation here Anthony on the low end of the spectrum you have Hive and Riot so we've talked about from an ex aash perspective these companies look to be value plays now on the other end of the spectrum you've got Tera wolf and Kors so these are the big two HPC players or at least in the case of Tera wolf anticipated to be an HPC player so uh another metric that would be great to see in here would be Enterprise Value divided by megawatts to to kind of compare and contrast some of the HPC activity but in terms of hash rate Anthony what do you see here uh from the different mining companies yeah I mean this is you know this is again it's looking at Enterprise Value so you can compare every company because some of these companies have got big hles so Enterprise Value really looks at every company side by side and when you look at the hash rate that they're currently operating in we've talked about before if you remember the uh riots when they looked made their approach to buy bit Farms we they talked about this floor of about 100 million per ex aash and so that was a valuation that the industry was using now bear in mind we've seen a a lot of downturn in some of these stock prices so the stock prices will affect the market capitalizing ation will also affect the Enterprise Value because Enterprise Value uses the market capitalization as part of the actual uh formula so uh with the Bitcoin price dropping to sort of you know 55 56,000 at the weekend it's it sort of like you know you're now getting uh valuation per EX aash for Hive and Riot around about 30 31 million and sat technology um DMG and G and three of the smaller miners uh also um are in that sort of group as well but when you're a smaller minor you're not getting a premium for your for your share price or these three certainly aren't getting a premium for their share price so uh you know it's more of a case of look at some of the bigger miners uh you know like the hives like riots um look at iron again 51 uh bit FS 56 million clean spots 66 million now with wolf and and core scientific I've already explained core scientific's um Enterprise Value because it takes into account something like $800 million of liabilities for their warrants it's not overall a great metric for them to use currently that metric will significantly improve and what you got to bear in mind and and uh with with wolf and with core scientific they might have the highest valuations here but if you think about potentially the size of their self mining as a whole business I mean cor scientific you know the last three and a half years have mined more Bitcoin than every Miner on that sheet and therefore you know it was a big minor but now their biggest part of their um service is actually going to be delivering HPC hosting we talked in in a previous podcast you know $6.7 billion dollar over the next 12 13 years that's going to outweigh their Bitcoin mining massively so when this value Val ation is by ex aash you're having a company that's valued on two different services and you're only using hash rate as the sort of like common denominator megawatts would be and and think in terms of now um you know is is probably a a better way of of highlighting it because there are miners out there that are and if you look at Hut they are uh self mining they are hosting they they have managed services so they've got a of like I think 1.32 gaw of power under their remit um use that as a as a as a you know as a megawatt divide that into the Enterprise Value and get and get a price per megawatt um and so we you know we we we can include that we'll probably include that in a in a future podcast uh you know in the next week or so just to sort of like show what that would look like in terms of these miners but this gives you an indication from you know most of these are self- mining so it does give you a relatively good indication I mean Hive um have a uh I'm going to say um 12 to 15 million of annualized uh revenues in terms of um HPC now if you look at what they provided in their recent um update for Q2 um the HPC revenues were something like about 10% of the actual mining Revenue so you could say that that Hive figure there of 30 .7 could be reduced if you just wanted to talk about the self mining elements of the business so strip out um the valuation that would be applied to HPC right is all self mining so we know that figure is probably an accurate one to you sat is all self- mining DMG predominantly all self mining at the moment they do have the fingers in number of Pies but they're not delivering revenues at the moment from that Griffin mining all self- mining Iron same as Hive have a small amount about 1.2 so 15 million annualized Revenue in terms of uh HPC at the moment but their mining in terms of Bitcoin mining is is probably $250 million of annualized Revenue so again it's you know you could be five or 10% of you know of of that size there bit Farms all self mining clean spark all self mining Cipher all self mining at the moment Marathon all self mining bit digital absolutely not all self- mining they've only got I'm going to say uh you know I would say self- mining from their position is probably about 40% of their business and the HPC is probably about probably 58% and they've got a little bit in staking so you know you could look at that um 75 um U million dollar per ex aash and say actually that probably needs to be halfed at least because you know they're getting most of their revenues now 4.3 million and growing in terms of their um in terms of their HPC clients they have two clients now and one of the the original client is due to um increase in the next few months once they've uh identified which machines that or gpus they're going to use to grow that contract so um you know effectively could argue that the self- mining is really a small part and so then again use the megawatts as a way of of analyzing this and bit deer very interesting they've got loads of businesses so they do uh Cloud hosting self mining hosting um Bitcoin Bitcoin miners they now produce their own machines they do HPC so from a self- mining perspective for bit deer again we we looked at their accounts I think it's about 40% was the self- mining Revenue as as part of the total revenue so again you could bring that down U and that would take you know bit deer's hash rate probably close to where hi and r are in terms of valuation there saluna um salonas is quite High um because they have not in terms of debt but they have some preference shares and some minority interests and so you have to include when you're calculating Enterprise Value you have to include uh not just debt but a couple of other items as well so that makes their Enterprise Value quite high for for a small minor but actually um again um if you were to sort of like look at what they do their self- mining is actually really really um small uh8 xash is self mining they've got like 1.6x a hash of um of hosted mining they've got a HPC contract they've got Dorothy 2 um signing up now they've got project Katy um imminently about to probably announce something in that area there they've got a couple of other projects that are on the go so again with saluna that's probably not giving you a a a great understanding of um of self- mining part of the business it's it's a small reflection so therefore if you were to look at the self- mining aspects that number would come down considerably um Huts at the moment have uh predominantly hosted and Management Services so their self mining is really really small in terms of in terms of and percentage of their megawatts I'm going to say less than 10% of their uh megawatts available is used for self mining so that gives you indication that that metric for them is probably um you know maybe not the maybe not the most appropriate one uh wolf at the moment um is pretty much all self- mining they do have a project um of I think it's two or three um megawatts for HPC so not really significant amount of HPC revenues at so it's probably reflective but again there's a premium their price because we expect an announcement you know imminently from Wolf to say hey ho we we've got a deal here to deliver a big HPC contract and we've already articulated what causes so as I say from a from a a value from current hash rate EV / Future Hash Rate majority a total self mind but there's a beware that where those companies that do more than self- mining do more research into understanding what how that would be applied and we'll certainly get the megawatt table out very very soon to show people what it looks like for megawatts because um in my annual report I do include megawatts in there so it's not going to be difficult to calculate um from this here great that was actually my point that I forgot at the start there Anthony was it would be nice to see a comparison in terms of megawatts uh but we'll get that video out shortly and we can compare and contrast the nice thing about looking at ex ahash is if and when bitcoin price starts to really rally this table will obviously be very relevant as as the conversation starts to shift now the next table the final one here very similar this is Enterprise Value to Future hash rate now you used end of 2024 targets which I think is appropriate obviously these numbers are changing quickly as we just saw with clean spark this week uh so we can hardly predict where we're going to be at the end of the quarter let alone the year or next year so end of 2024 the table itself in terms of distribution looks very similar so still have sadle Riot Hive at the low end or I guess the value end of this uh spectrum and then you've got the wolf and the core scientific for the reasons you just mentioned on the on the higher end there Anthony so walk us through how this table changes or shifts looking a couple months out yeah so there's a caveat with Sato I mean they're at sort of they're operating they've got I think 0 56x hash installed at the moment they're operating in August at 044 so they're about 20% down on what they should be achieving and they recently had a fire in June so that give a little bit of an un selling as to where that is there but they they've got a a sort of like a near-term growth Target of 1.8 xash now that would be effectively three times where they are at the moment and given the time frame the end of the year that's probably unlikely for to achieve that but it was the only target um I had from a near-term target from Sato we had remained on the on the podcast literally two weeks ago so you know they went through their presentation we did question them on on on how and when they would try to um to get that Target and you know he didn't have an answer for us in term of terms of a time frame but they're looking at lots of different um uh ways to sort of like to grow some re capital and and and help deliver that they are buying S21 machines as we speak to um install and and and replace the ones that were damaged in the actual fire but yeah as I say I I don't think they're going to achieve that I don't know how much growth I would expect to see from SATA between now and the end of the year but it would not be three times where they currently are absolutely not so um taking Sato out of the equation you then have the likes of Riot now being effectively the most undervalued minor um and actually as a pure Bitcoin miner that is reflective of their self- mining position there so you know only 20 million dollar per ex aash and um which is which is you know in in in terms of valuation that's really good if you think about let's just look at ex aash from a from buying mining machine so if you were to go and buy um you know the uh the mining machines to get to deliver one ex aash um you're going to have to pay at the moment for the s21s um somewhere quite close to $20 million uh for that so um we we saw in the early parts of this year that iron and clean spark we're getting between $14 and $16 um a terahash and so in terms of EX aash that's 14 to 16 million that was at the very very cheap end and that was them using what they call coupons to reduce the price now if you go and um go to bit may now and say I want to buy one ex aash you've got no coupons you can be paying anything from probably 20 to $23 million in ex aash that would be there so actually if you look at Riot there with their expectation of achieving their hash rate which we've said many many times we expect them to to fully do by the end of the year um that gives them you know a value per EX aash lower than the cost of actually buying the machines now so and bear in mind they've got these facilities that they own they've got two massive sites the two largest um Bitcoin mining sites um in the world at rdale and Cory Carana so you know the facts of the sites you know are free because you know to replace that mining um hash rate would cost you more than the actual valuation there so that's worth knowing Hive again Anthony just to jump in there very interesting that you bring that up it would cost more to replace the machines than you could buy Riot for in terms of future ex ahash I guess the concern there though Anthony as as we've highlighted many times is uh operating hash rate is is a whole another thing right is having them plugged in and actually hash ing right now I feel like the market isn't confident that Riot is able or can do that and they're discounting it yeah absolutely right and and you know we we've we've sort of like winced many times when we've seen the right updates month after month and we you know we're saying why are they not delivering as many as their peer Miners And yes there's an element of the energy strategy and the credits and the um uh the power cells that they use to to to deliver that energy strategy um but if you think about August I think it was like $6.4 million in terms of uh Power sales and demand response credits um but they were short um you know significant amount in terms of Bitcoin mine compared to their Pier so you know they had 23 uh ex aash plugged in but they're only operating at about 14 and a half that's you know it's nearly nine ex aash uh Gone Missing effectively and yes they got 6.4 million which if you turn if you convert 6.4 million to bitcoin it's about 110 Bitcoin um based on the end of the month price so you know that would have give them you know it's a little bit of leeway but again you still want probably another 110 uh Bitcoin to get them where they needed to be if they' ever had those machines plugged in uh working 247 during that month instead of ciling but uh you know again you know you'd expect with the future Ash rate these num numbers have come down because we're looking at the same Enterprise Value now um the Enterprise Value end of the year would would obviously change between now and the end of the year but if you're looking at now and people say the some of the future hash rate is built into their market capitalization so we noticed when iron went out and said we're going from 20 to 30 and we were like you know um wow that was a you know one of the biggest Updates this year the stock price went phenomenal I mean you know it you know we were in um uh Dallas uh in June visiting um Cory carner and uh the Denton facility and I remember during that period iron share price went to about $115.50 and so you know the the market really saw that it wasn't about HPC the market was looking at them from a hash rate perspective and giving them a real premium from a hash rate perspective I mean today the share price is like less than half that it's around about the $7 50 Mark so um you know that that there was you know that if you go back to that period in June then maybe the iron would have been like you know into the 50 $60 per per um $60 million per xash and so with the with their price coming down it means that the value per xh has come down as well um interestingly bit Farms there 29.7 million well right we're offering significantly more than 29 .7 million 4 bit farms in that deal so um I know you know the shareholders were um um you know not happy with the original offer and you know I wasn't particularly happy with the original offer either I'm a shareholder in pit farms and a shareholder in Riot um but it's a case of you know how do you value it and one Miner Leverage other point I'd like to mention is also with mining machines um you know mining machines you know that we they get depreciated um over a period um you know because they have a life maybe three four five years so mining companies will depreciate them over a number of years some will use I think some companies used to use two years and then some companies use five years so they don't all use the same depreciation um method from a period point of view but if you think about mining machines now so that so if iron and cleanpot would buying these s21s at $4 $16 per terahash and the Bitcoin price rallies to say $100,000 the price of machines will go up which will mean that some of these companies that have got these latest machines will also see valuation increasing in the actual the actual miners that they hold on the balance sheet because that will come as like effectively and uh an unrealized gain in the same way the leverage you get that's that's the whole leverage nature of this is another this is another thing to think about so we know at the moment Bitcoin mining machines are probably you know depreciating down and there's no there's no values be in mind in 2021 we saw people paying $80 per terahash for s19 and there's two companies we've announced you know this year buying s21s which are more than twice two and a half times more efficient and can deliver a lot more Bitcoin for you know a fifth of the price and that's significant Anthony because if you compare 14 or $16 to $80 you're talking a multiple five six times value of these fleets some of these companies have hundreds of millions of dollars invested in their Fleet if the value of that Fleet goes up 500 600% uh that I guess that's kind of an accounting phenomenon hey when you get reverse depreciation or whatever appreciation I guess that's called uh but yeah very interesting Anthony and and something we really don't talk about a lot you talk about the price of Bitcoin going up revenues going up the Huddle going up but the actual equipment itself gets more valuable yeah and and so you know um that's something to bear in mind um and actually that's something to bear in mind if you were sort of like thinking of maybe setting up your own personal mining um you know doing doing it you know indidual through a hosted company is you go out there and buy your machines and you're hoping the Bitcoin price will increase so it gives you a better margin because you've got to pay for the electricity you got to pay like a like a management fee or hosting fee to look after your machine but if the Bitcoin price rallies to you know like we said 100,000 and you're then getting that extra margin what should also be happening is if you ever came to want to sell those machines you'd probably get a better price for selling the machine so you have a your Capital value that you've spent initially um could increase so if you were paying say you won't get the prices that um clean spark and iron were achieving because you're not buying the same level of um you know miners but say for instance you're paying $25 a terahash for an S21 um Pro and the Bitcoin price rallied and that went to say $40 a terahash then you know you you could make a significant gain in terms of capital gain on your actual investment there so it's not just a case of if you do this type of um you know going to this mining business it's not just the the margin you make on mining there's a potential um margin that or capital gain you'll make on the actual machine because they'll have a value as well so it's it's f for thought for people you know if they were interested in doing that sort of thing and we're actually seeing the same thing on the HPC side really Anthony with the demand for power and megawatts and Facilities now reaching a premium as well so it works on both sides uh very interesting analysis today I I learn a lot when we go through these tables I feel like I'm starting to understand uh the balance sheet the extract in more detail so you're doing your job Anthony I'll give it back to you for any closing thoughts but you guys this stuff takes a lot of time to put together feel free to hit the like button it's 100% free to do big help to the channel if you're not already subscribed MCN money feel free to join and let us know in the comment section below if you find these type of educational videos valuable if you use these metrics for your own due diligence and if you're currently holding any of the companies we talked about in today's video and Anthony appreciate the time I'll let you close out here yeah no it's um it's an interesting exercise looking at these here um we'll certainly get the megawatts um uh value um in terms of um you know Enterprise Value to megawatts to see what that looks like that probably give a very much more accurate position then because what that will do then is that will tell you how um companies are utilizing their power to drive value in the company and you just articulated about these companies having sites so we know that um many of these companies have got options to buy sites and have significant amounts of power in the future um some of those option prices will will be increasing as well so if they decide actually you know what we need to move in a different direction and we have an option on a site a one gaw site for instance they might be able to sell that site or sell the option on that site um to a provider to to to avoid the sort of like 18 months two years of having to incur Capital cost to build it to start delivering revenues they might just decide to say you know what we paid you know x million for it when we when we bought the option and now it's worth five times that because a hyperscaler wants to come in and and do it on their behalf there and and so that you know that's an interesting D cost me as as to you know how that um can drive value in some of these companies as well so you know you you've got some miners now with significant um Power on the you know in in on on the balance sheet you know the likes have bit deer with over 2.5 gaw I'm not saying 2.5 gaws of fields they've got 2.5 gaws of of sites that they're actively developing um so that needs to be taken consideration you've got iron who've got uh 750 uh megawatts at the Children's site cuz it's had had an increase of 150 there got 1.4 GW at um a site that will need to be obviously built um and they've got a future an option on another site of about one gwatt so you know that's potentially you know they've got two sites there that they could you know determine a different route to get some much needed Capital into the space if if if it's got a if the valuation of these is going up as people led to believe that gives them some great leverage to then sort of like deliver children and their current sites to a really high level in terms of HPC because think about HPC I think Sam said uh on the podcast recently or or or or Aiden may have said I'm trying to think I think it was maybe Aiden and Frank we had Aiden and frankcom if you're delivering 30 megaw of HPC that's the equivalent of delivering 300 megawatt of Bitcoin mining and so that's the power usage there now you don't need 1.4 GW of site to deliver HPC I mean you would be I mean 1.4 gws you Del you know you'd be delivering you know enough enough Ai and HPC to cover half the world or something you know so you know in terms of mining facilities if you if you if that if that ratio is accurate that means that you know if they converted 1.4 into HPC that's effectively like um you know um for 1 point Sorry 14 gws of Bitcoin mining and the biggest Miner at Marathon are operating with 1.1 gaw at the moment they've got 35 xah has so 35 xash multiply that by you that's like 350 400 xash that's half the uh Global hash rate at the moment on one site effectively that's if the 10 to one ratio is accurate but that would be interesting too Anthony once you comparison we can start looking so that'll be for another discussion you guys but lots to unravel here as always appreciate the time today Anthony great episode as always and we'll see you in tomorrow's video [Music]