Another day, another significant event in the crypto space. This time, a merger announcement between GWAC (SPAC) and Cipher Mining, a subsidiary of Bitfury Holding B.V. It is clear that SPACs have become a very popular form of entering the public markets. And now, we have a crypto SPAC deal. How exciting! These types of deals are the most fun to trade, plus we have been bullish on crypto forever. So, in this article we explore the details of the Cipher Mining merger and make a prediction based on the facts and some light speculation.
Cipher Mining Merger Announcement
What is the big news? Did Bitcoin Take over the world yet? Yes, it did. Check out the latest announcement.
According to BusinessWire:
Cipher Mining is a newly formed subsidiary of Bitfury Top HoldCo B.V. (“Bitfury” and, together with its subsidiaries, including Bitfury Holding B.V., “Bitfury Group”). The Bitfury Group is a leading provider of Bitcoin mining hardware and other blockchain software and services. Since its inception in 2011, Bitfury Group has deployed more than 500+ MW of computing power and mined more than 600 thousand Bitcoin. As a stand-alone company, Cipher is expected to be positioned as a U.S.-centric Bitcoin mining champion with potential to reach a cumulative deployed capacity of 745MW by the end of 2025.
The Company’s U.S.-based data centers are planned to come on-line between Q4 2021 and Q2 2022 with a total of 445MW of power capacity and planned expansion of an additional 300MW deployed between 2023 and 2025. As the projected largest scale mining platform in the U.S., Cipher will provide investors the opportunity to invest in the Bitcoin industry via a leading mining company operating in a highly transparent and well-regulated environment.
Well, that’s great news! Especially if you are a long term investor in the crypto space.
Cryptocurrencies, particularly Bitcoin, are dominating the world of alternative finance. And Cipher Mining appears to be taking advantage of this trend.
It is becoming very clear that industry is still in its early stages, and growing exponentially. For this reason, the majority of our articles are written on cryptocurrency related stocks and SPACs.
Why We Are Very Bullish on GWAC Stock
There are many reasons to be extremely bullish on these crypto stocks. The fact that the industry has grown to over $1 Trillion in market cap just in cryptocurrencies is a low hanging fruit. The fact that many cryptocurrencies have increased in value by 10000%+ should give you an indication of the interest in the space.
For example, cryptocurrencies like Dogecoin, Bitcoin and Ethereum are up 1000% in one year. That is very indicative of a massively growing industry.
But why are we bullish on Cipher Mining specifically?
3 Main Reasons:
- Heavily owned by insiders
- Crypto is growing exponentially
- $2B Merger Deal
Heavily Owned By Insiders
One of the best ways to tell how well a stock will perform is the makeup of insider ownership of the stock.
Check out this visual from Simply Wall Street on GWAC Stock:
If this data is correct, the majority of the stock is owned by insiders (hedge funds and institutions). Just look at that chart, it’s almost all hedge funds. That is generally a very bullish sign.
Simply put, because the more insiders hold the shares, the less available supply there is for us poors. Less than 25%, if the graphic above is correct…
Which is bullish.
Obviously, this could change at any point, based on the negotiations and stock agreements between the company and its shareholders. It is generally not a good idea to own a stock that insiders sell, so make sure to watch the ownership often.
Crypto is Growing Exponentially
Does reason number 2 really need explanation? Not really, just take a look at the Bitcoin chart below:
The word Exponential does not even begin to describe how exponential this trend is. This is a straight line up situation, as you can see.
And Bitcoin is not the only one. There are hundreds of cryptocurrencies that are up 1000%+.
The interest is there and you are seeing it expressed through the price. According to Coinmarketcap, the crypto market is actually approaching $2 Trillion. Insane!!!
Growth and interest is there. And companies will continue to come out of the woodwork to capitalize on this. For example, Marathon Patent Group and Riot Blockchain have already appreciated by over 1500% in one year. Very bullish.
Is Cipher Mining the next parabolic move?
$2B Merger Deal
Most simply put, the majority of the reason we are so bullish on this stock is the merger agreement details.
It may sound simple and dumb, but the answer is right there.
Check out the Press Release Details:
- Transaction builds a U.S. based Bitcoin mining champion
- Combined company valued at an enterprise value of $2.0 billion
- Includes $425 million fully committed PIPE investment, secured with anchor investors, including Fidelity Management & Research Company and Counterpoint Global (Morgan Stanley)
- The PIPE investment includes $50 million investment-in-kind from Cipher Mining’s parent company, Bitfury, and is structured as a credit for future purchases of operating services and equipment for Cipher
- Planned mining capacity of 745MW by the end of 2025 and industry leading cost of energy of approximately 2.7c/kWh The transaction is anticipated to close in Q2 2021
In bold is what caught our eye. It says it right there. The deal is worth $2B.
If the current market cap is about $200 Million and the final merger documents claim they are worth $2B…then why would this not be a 10x move?
Can it really be that simple?
Well, judging by the popularity of crypto, insider ownership and who is performing the merger(big banks), then it is very likely.
Big banks like to stick to their word, it makes sure they get paid.
Cipher Mining Stock Prediction
So what’s the verdict? Is this merger going to a parabolic move like the others?
We think so.
Based on the evidence and the writing on the wall, this is probably going to be a parabolic move. RIOT, MARA and others have achieved several billion $ market cap with their mining operation, so why would this one not?
Conclusively, the variables involved in this trade are very simple.
Crypto is going exponential, massive insider ownership and a clear signal from the merger documents that the company is worth $2 Billion. We believe this all adds up to a parabolic move.
It is not impossible for this stock to hit $100, so we have decided to take a position around $11 average.
Again, with any asset speculation, specifically SPACs, the key is to control your risk and make sure you follow the companies very closely. Any sign of impropriety will tank the stock.
Always remember to do your own due diligence and not invest more than you can lose. There are many opportunities out there…and cipher mining could be a big deal.
What do you think?
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