Cipher Mining Stock - 5X? | GWAC Stock | US Bitcoin Mining Stock - YouTube

cipher mining will be a newly formed  us-based bitcoin mining company  

it's going to go public on the nasdaq via a spac  business combination with good works acquisition  

corp ticker GWAC or GWAC full disclosure i  do have a position in good works i first talked  

about this blank check company in my december  three specs to buy now video when the common stock  

was still trading at nine dollars and 80 cents  and the warrants were still trading at 73 cents  

congratulations if you got in on that trade  as you'd be up 17 on the stock and 252  

percent on the warrants as of tuesday's close the  business combination is expected to be completed  

in q2 of this year and the ticker is expected to  change to cifr in this video i'm first going to  

give a high level overview of cipher mining second  i'm going to go over my bull case for the stock  

third i'm going to go over my bare case fourth i'm  gonna go over my game plan for the common stock  

and the warrants all this right after i am not a  financial advisor this video is for entertainment  

purposes only learn to invest like a wolf at your  own risk what's up everyone welcome back to my  

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if you enjoy it as it truly helps out the channel  so without further ado let's get right into it  

what is cypher mining cipher is a newly  created us-based bitcoin mining company  

like many SPAC targets it is very early stage  it's pre-revenue it currently does not have  

any bitcoin mining operations or even any  data centers up yet using the proceeds from  

this business combination it plans to build  out four data centers by the end of 2022  

three in texas and one in ohio for a build out a  445 megawatt capacity and approximately 14.8 extra  

hash per second of hash rate to put that into  perspective one of its main competitors marathon  

patent group or mara is projecting approximately  10 extra hash per second by the end of 2022  

cipher expects the first two of those data centers  to come online before the end of this year after  

these four initial sites they expect to fund  100 megawatts of sites per year from their  

operations with the five-year plan to build out  745 megawatts of capacity or approximately 39.8  

extra hash per second to put these numbers into  perspective this slide compares cipher mining's  

build out projections in megawatts to that  of its competitors as you can see from their  

projection they expect to have the highest hash  rate compared to argo mara bitfarms riot hive  

hut 8 and mgt capital they forecast that  these data centers will produce a hash rate  

that will equal 9 of the global bitcoin network  hash rate and their goal is to become the largest  

and most cost efficient bitcoin miner in the  united states and one of the largest in the world  

remember that this is their own projection and i  always take these projections with a grain of salt  

how is cypher mining trying to differentiate  itself from its competitors other than  

trying to become the biggest bitcoin  mining operation in north america  

first cipher expects to have the lowest  electricity costs relative to its peers with 27  

dollars per megawatt hour its pure that comes the  closest is mara with 28 dollars per megawatt hour  

with bit farms and hive coming in next at 40  dollars per megawatt hour they expect to achieve  

these low electricity costs from their low cost  power purchase agreements i'm not sure how strong  

these power purchase agreements are so that's  something to keep an eye out for in the future  

especially with three of those planned sites being  in texas and there being an ongoing power crisis  

in texas that could be a risk but if they  do achieve this low electricity cost goal  

then this will be a significant advantage second  they are also differentiating themselves by using  

chips servers and other bitcoin mining equipment  from bitfury which is based in the netherlands  

from what i understand its competitors primarily  use bitcoin mining equipment from chinese-based  

companies such as bitmain the reason that this  is an important differentiator is that many people  

including me believe that in order to have a fully  decentralized bitcoin there needs to be geographic  

diversity as well as mining equipment diversity if  all the bitcoin is mined in china on chinese-based  

mining equipment that kind of defeats the  purpose of a fully decentralized network  

now i'm not sure if cipher will also be  using chinese bitcoin mining equipment  

to diversify their supply chain but i do  think that using non-chinese-based equipment  

could be perceived as an attractive  trait by institutional investors  

third after listening to the investor conference  call it appears that cipher is trying to emphasize  

that their bitcoin is made in the usa on  the call cipher mining ceo tyler page said  

if you move forward in our plans we will be one  of the largest producers of bitcoin in the world  

those bitcoins will be freshly minted and never  been transacted and they will have never left the  

u.s regulatory system i think that what they're  trying to get at is that they can offer assurances  

that their bitcoin has never been involved in  any criminal activity like money laundering or  

terrorism now i haven't done any other dd on any  of the other bitcoin miners but this is the first  

i've heard of this kind of importance being put  on the bitcoin having never left the us regulatory  

system so to me that mindset and culture appears  to differentiate them from their competitors so  

what about its partnership with bitfury goodworks  co-chairman doug wurth who is also chairman at  

standard power which provides hosting services to  bitcoin miners in ohio was impressed by bitfury  

they began discussions which culminated in  this deal bitfury will be a pipe investor  

and will be heavily involved in the buildout  of the four data centers from site development  

oversight and management to guaranteed us access  to bitfury ASICS chips optimized for bitcoin mining  

bitfury has seven generations of asics with  the five nanometer chip expected this year  

now you may be wondering how will the global  chip shortage affect delivery of these asics  

according to the investor presentation bitfury is  expected to be able to utilize up to 10 000 wafers  

equivalent to 200 megawatts capacity per month  at samsung foundry due to long-term relationship  

as a tier one partner advanced planning and  optimized supply chain even though they state this  

in the investor presentation i still view the  global chip shortage as a high risk as we can't  

know for sure if samsung will really be able to  manufacture their chips in a timely manner so  

in my opinion this may delay the build out of  their first site or they may be forced to use  

the older generation chips which will not be as  efficient in mining bitcoin one positive is that  

according to this slide bitfury has a track record  of complex and large-scale data center development  

from 2013 to 2020. so now let's take a look at  the projected financials assuming btc's price  

ranges from 25 000 to 50 000 cipher is projecting  revenues of 1.009 billion dollars in 2025 gross  

profit of 787 million dollars and to be ebita  positive net income positive and free cash flow  

positive in 2022. even if btc falls to 12 500 they  are still projecting that they will be profitable  

remember that these are just projections we won't  really know how all this plays out until they get  

their data centers online and start reporting the  results from those operations so now let's take a  

look at the transaction summary at ten dollars  per share the implied market cap is two point  

five zero one billion dollars shares outstanding  is just market cap divided by price so 250.1  

million shares outstanding goodworks will receive  one of seven board seats i presume it will be doug  

worth given his relationship with bitfury existing  shareholders will be subject to a two-year lock-up  

cypher will be debt free and have 501  million dollars on the balance sheet  

pipe investors will own fourteen point nine  percent g wax back will own six percent  

SPAC founder shares will own one point five  percent employee stock ownership plan will  

own seven point two percent private placement  will own zero point one percent cipher existing  

shareholders will own 70.3 percent all right so  that was my high level overview of cipher mining  

and the business combination i didn't cover all  of the investor presentation so i encourage you  

to take a look at it and i'll leave a link to the  investor presentation in the video description so  

what is my bull case for the stock i'm going  to use the revenue projected in the investor  

presentation for bitcoin being 100 000 in 2025.  that projected revenue is 1.788 billion dollars  

to give myself a margin of safety i'm gonna  take off 25 to get 1.341 billion dollars  

two comparable companies are mara and riot in  september 2020 riot had a ps ratio of 10.32  

and mara had a ps ratio of 12.91 so i'm going  to be a little conservative and project a 10x  

ps ratio 10 times 1.341 billion is a  market cap of 13.41 billion dollars  

divided by 250.1 million shares outstanding  gives a stock price of dollars and 62 cents  

tuesday's closing stock price was 11.52 cents  for a return of 365 percent in my bowl case so  

what is my bear case first bitcoin may crash  again to twenty thousand dollars per bitcoin  

even though the investor presentation says that  they will still be profitable if btc falls all  

the way down to twelve thousand five hundred  dollars i still have a very hard time believing it  

second cipher's electricity costs and hash rates  could come in way worse than their projections  

in my bear case i think that the stock could tank  big time to well below five dollars per share  

so i do view this as a very high risk  potentially high reward investment  

so what is my game plan given that i'm already  up 148 percent on my g whack warrants and 15  

on the common stock the safe thing to do would be  to take my profits especially since growth stocks  

represented by the qqq are hovering around  correction territory but as you may know from my  

bitcoin price prediction video i made last year  when btc was hovering around 18 000 i am still  

fairly bullish on bitcoin because i only have  such a small position in g-whack and i'm still  

bullish on bitcoin i plan to just hold out for now  for additional gains on both the common stock and  

the warrants at this time i'm not interested  in selling the commons for anything less than  

twenty dollars or the warrants for anything  less than five dollars whether it takes three  

months or three years to get there for now  i also don't plan on increasing my holdings  

because i already have a lot of exposure to  bitcoin in my overall portfolio if there's a crash  

and i can pick up the comments for less than six  dollars post merger or the warrant for less than  

50 cents or so then i may consider increasing  my position in cypher mining of course with the  

warrants i always have to be alert and make sure  that i don't get caught up in an early expiration  

and if you want to know more about spac warrants  be sure to check out my spac warrant basics video  

where i answer a lot of questions that viewers  have asked me about warrants all right so just a  

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