Betting on the end of crypto mining

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Health, Wealth, and Happiness

August 3, 2022

"If you believe you can, you probably can. If you believe you won't, you most assuredly won't. Belief is the ignition switch that gets you off the launching pad."

- Denis Waitley

New Workshop: Integrating Smart Contracts Into Games!

Our new hands-on workshop is open to everyone: both free and Premium members. Click here to RSVP.

Next Wed., Aug 10 at 6:30 pm ET, we will excitedly host Neeraj Kashyap, the CEO of Moonstream.to, a no-code Web3 game engine.

Neeraj worked as an engineer at Google before joining Doc.ai as their head of AI and blockchain. As blockchain games began to take off, he founded Moonstream as a way of easily adding on-chain game mechanics to videogames.

For investors, this will be a deep dive into the tokenomics of blockchain games. We'll evaluate opportunities for investing in blockchain gaming tokens and the companies creating them. Click here to reserve your spot.

Must Read

Today’s most important story for crypto investors.

Proof of Work Die-Hards Plan to Fork and Mine Their Own Chains (Decrypt): The Merge is changing everything.

The planned upgrade to Ethereum will shift Ethereum from proof of work (high-end computers guzzling lots of energy) to proof of stake (everyone can participate using very little energy).

We've talked about 3 Ways to Invest in the Merge, but here's an entirely new set of opportunities: all those companies that have invested billions in high-end mining rigs will have to pivot when Ethereum no longer needs them.

For example:

1) Ethereum Classic (ETC) has doubled in price over the last two weeks (see chart below). The Ethereum spinoff has no plans to switch to PoS, so some miners are switching to ETC, and investors are betting more will follow.

2) New forked versions of Ethereum, such as those mentioned in this article, may pop up as Ethereum alternatives. It's hard to see these getting long-term traction. On the other hand, Dogecoin -- a bitcoin fork -- is still alive and kicking.

3) Other PoW tokens could see a pop as miners turn away from Ethereum toward other PoW coins (including bitcoin). However, this may also increase competition for mining rewards, meaning publicly traded mining companies like Hut 8 (HUT) could see their stocks fall further.

It's helpful to think of times in history when major capital investments have been made obsolete by new technology: replacing horses with cars, recorded media with digital, mainframes with cloud computing.

Who were the winners and losers in these technology shifts? If you could go back in time and invest on either side, which companies would you bet on or against?

We'd love to hear your thoughts on winners and losers of The Merge. Email us at info@bitcoinmarketjournal.com with your investing ideas.

Your Money is Growing

Truth in numbers.

If you watched our Must-See Video from EthCC, you heard Vitalik Buterin call Ethereum Classic (ETC) a "totally fine chain" for those who disagree with Ethereum's move to proof of stake.

You'll recall that ETC was a fork of the original Ethereum, created after the community was split following the Dao hack of 2016 (history lesson here).

Since then, ETH is widely regarded as the "true" Ethereum, while ETC has gone its own way with its own community.

Now, that community has new life as mining companies re-invest in Ethereum Classic's growth and traders bet on the jump:

(Courtesy of CoinMarketCap)

Investor takeaway: Our philosophy is to invest in long-term value, not short-term profit. It's hard to see how ETC can be nearly as successful as ETH over the long haul, especially with new Ethereum forks potentially on the horizon.

Even the ticker ETC implies "just another one of those."

As investors, the saga is worth watching because it's a rare opportunity to see two versions of a "company" -- like two scenes from parallel universes -- get valued in real time.

Our guess is the mining companies will have to find another way to pivot or they'll eventually go the way of the horse-drawn carriage. Long-term, ETC ain't it.

Best Layer 1 Protocols for Investors

by Anatol Antonovici

Layer 1 blockchains (also known as Layer 1 protocols) are the fundamental blockchains upon which other applications are built.

Our thesis is that most new technologies eventually consolidate into two or three big winners — think Macs vs. PCs, Google vs. Bing, iPhone vs. Android, etc. Blockchain, we predict, will be no different.

By betting long-term on the right Layer 1 winners, it could be like investing in Apple back in the 1980s. In this piece, we cover the top L1s as rated by our analysts.

Another way of thinking about it is the Layer 1 protocol represents the blockchain itself.

In fact, we only defined “Layer 1” after introducing “Layer 2” protocols, which are secondary networks meant to improve the scalability or security of an underlying Layer 1 infrastructure. For example, the Lightning Network is a Layer 2 solution for bitcoin, which acts as Layer 1.

Layer 1 protocols are big business. Together, they account for more than 60% of the crypto market. Our analysts rated them using our Blockchain Investor Scorecard. Here are the high-level takeaways. (Premium members can access detailed Investor Scorecards for each L1, but the high-level ratings are available to everyone.)

Click to see our ratings of the best L1 investments.

ICYMI