Brief Breakdown: Valkyrie Bitcoin Mining ETF (NASDAQ: WGMI)
In our Brief Breakdowns, we pick a stock and take opposite sides – one of us presents the bullish argument and the other presents the bearish argument. If you haven’t already, subscribe to our newsletter here to get our articles directly to your inbox and follow us on Twitter and Instagram! Also join us for our Twitter spaces, every Tuesday we discuss our stock breakdown at 8 PM EST, & Friday we have a Bitcoin Happy Hour at 4:30 PM EST!
Company Description and Qualitative Analysis
The Valkyrie Bitcoin Mining ETF (ticker: WGMI) is an actively managed ETF that invests in public bitcoin mining companies that use renewable energy. Currently, the portfolio uses 77% renewable energy and allows investors to gain exposure to the mining industry, is easily accessible because it is available on the NASDAQ, and is actively managed by a team that follows the industry closely. This is an accessible investment that allows investors to get exposure to a rapidly growing industry without being an expert in the space.
Quantitative Analysis
At the time of this writing (3/6/2022), WGMI is trading at $23.16 with a 52 week range of $20.68 - $30.51. WGMI started earlier this year, opening at $27.05, and is currently down 14.4% year to date. The top ten holdings of WGMI are as follows: Argo Blockchain PLC (10%), Bitfarms LTD (10%), Cleanspark INC (9%), HIVE Blockchain Technologies (9%), Stronghold Digital Mining (8%), BIT Digital INC (4%), Digihost Technology INC (4%), DMG Blockchain Solutions INC (4%), Marathon Digital Holdings INC (4%), and Power & Digital Infras (4%). This financial analysis was done using financialstockdata.com (sign up using our promo code GCI here). Below we have percent returns for WGMI since its launch.
Financial Stock Data allows users to analyze a company’s financials and qualitative factors such as leadership better than any other platform available. You can use the same tool as the pros for 50% off using our promo code GCI at checkout. Be sure to sign up for Financial Stock Data HERE.
Bullish Thesis
Here are three points to support the bullish thesis:
Broad Exposure to a Rapidly Growing Industry: The bitcoin mining industry is rapidly growing and will seemingly continue to grow in the years to come. Currently the bitcoin mining industry is estimated to be $4050.5 in 2020 and could grow to $4502.4 million by 2026. This ETF will allow you to get general exposure to a rapidly growing industry all while not having to research direct companies.
Expert Management: Similarly to the point above, the ETF will allow you to have exposure to some of the top companies in the bitcoin mining industry but you will not have to do any of your own personal research. This ETF will be managed by people who will be connected to the industry and will continually research and analyze these companies. Because of this you can guarantee that you can get exposure to the best bitcoin mining companies without doing the research.
Mining is Essential for BTC Industry: If you truly believe in the bitcoin and that it will be the future, mining is essential. So if you’re a bitcoin bull, mining will be here to stay and will become more necessary as time goes on. This industry is essential for the network to keep going, so some exposure outside of the asset could see great returns.
Bearish Thesis
Here are three points to support the bearish thesis:
Less Risk Less Reward: With this and with any ETF, you’re going to have a mixed bag of winners and losers. Although the bitcoin mining space is winning, there will be some companies that are losers in this industry as is with any industry. Because of the vast exposure needed for an ETF there is going to be some companies that are bigger winners than others and the ETF will hold back the returns from the large winners.
ETF will Hold Losing Companies: An ETF will always hold losers, it is inevitable. Some companies may lose in the bitcoin mining space and in my opinion, it will be the companies that do not hyper focus on bitcoin mining and jump into things like web3 and other things. Time will tell if these other endeavors are successful but in my opinion bitcoin will succeed and companies that master the bitcoin mining craft will be the ones that succeed.
Bears believe Bitcoin will Fail: Okay, okay, this is a difficult point for me to make. I will not lie. Bears will always come out of the woodwork whenever bitcoin price drops and will say bitcoin dies, but if you’ve been paying attention you do not think that will happen. Bitcoin industry and the bitcoin mining industry is simply too big to fail at this point. If you do not feel you want exposure to the asset, mining could be a good avenue to get indirect exposure to a widely growing industry.
Learn more about WGMI here. Stay up to date on Green Candle by subscribing to our newsletter and following us on Twitter and Instagram! And don’t forget to join us in our Twitter Spaces Tuesday night at 8 PM EST!
Video edition: Sunday Scaries Stock Talk
If you’re new to stock investing, check out our introduction to stock investing series:
Have a great week everyone,
Brandon
Disclosure: The article was written by Brandon Keys, and it expresses the author's own opinions. He is not receiving compensation for it. I have no business relationships with any company whose stock is mentioned in this article. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock. Brandon is not a financial advisor. I encourage all readers to do further research and do your own due diligence before making any investments.