Looking for a way to play the rise in Bitcoin? Think Vinanz
“…The company’s value has surged since it announced it was ramping up its operations earlier this month. Vinanz, with its low-cost, scalable model, powered by green energy, appears well placed to offer exposure to higher bitcoin prices…”
The past 18 months have tested the resolve of even the most hardened cryptocurrency investor, but Bitcoin seems once again to be rising from the ashes, up by a third over the past few weeks. And with one of the currency’s periodic halvings due next spring, and the prospect of regulatory approval for Bitcoin ETFs issued by major institutions, the coin may be set for further gains. Aquis Stock Exchange (AQSE) newcomer Vinanz (AQSE:BTC), is positioning itself to take advantage.
Vinanz joined AQSE in April, raising a gross £755,000 to build a network of Bitcoin miners through third-party cryptocurrency mining providers across North America. Though currently focused on Bitcoin, Vinanz will consider mining other cryptocurrencies and operations in the decentralised finance and big data space in the future. The company expanded its market presence in September, joining the US-based OTCQB Venture Market under the ticker VINZF.
Vinanz ramps up
Vinanz offers UK investors exposure to Bitcoin as the date of the currency’s next ‘halving’ approaches. Bitcoin’s protocol specifies that only 21 million coins can be mined, with the rate at which new coins can be created decreasing by half every 210,000 blocks, every four years or so. Some 19 million coins have already been mined, and the price is expected to rise sharply after the next halving, expected in April.
Vinanz is positioning itself to benefit from rising prices as the number of mined Bitcoins comes ever closer to the total permitted. And it has been designed to do so through a low-cost growth model. Rather than owning and running its own data centres, and risking the associated costs, Vinanz pays fixed monthly fees to professional data centre companies charged with installing and maintaining Bitcoin ‘miners’, the powerful computers capable of performing the complex calculations through which new coins are generated. In the company’s words the model ‘allows us to deploy all the cash we mine and raise towards spinning miners for more BTC and not betting on real estate.’
Vinanz went public with 20 Bitcoin miners, but expanded rapidly within its first week, acquiring the services of 100 new Bitmain Antminer S19J Pro ASIC miners, increasing its Terrahash processing power by 650pc to 12,000 TH/s (one Terrahash – a primary measure of mining performance – is one trillion hashes per second). The new fleet, located in Labrador, Canada, takes advantage of the region’s reliance on hydro power generation, addressing customary concerns regarding crypto’s carbon consumption. Vinanz says electricity rates will decrease as the company employs more computing firepower, on a sliding scale from $0.066 per kilowatt hour to $0.057 or less.
By June the new miners were fully operational, running at a combined processing power of 10.4 Petahash/second (PH/s), the rate increasing to 12 PH/s by the end of September, by which time Total Bitcoin in the company’s combined crypto wallets had risen from 5.01 Bitcoin at the time of IPO to 7.84.
Vinanz ramped up its operations further earlier this month, raising a gross £350,000 to acquire 250 additional bitcoin miners, tripling the size and power of its mining fleet. The new miners, also in the Bitmain Antminer series, and hosted in the same Labrador data centre, will increase the company’s overall processing rate to around 38 PH/s.
Vinanz CEO David Lenigas said: ‘With the next Bitcoin halving fast approaching and the institutional ETFs in the USA moving through their applications with the US SEC, the board of Vinanz thought it highly prudent to dramatically increase the number of spinning Bitcoin miners in North America as soon as possible … Increasing our mining fleet to 370 machines in the coming weeks should see a new Bitcoin generated to our wallet around every 10 days or so and generate over US$1.2million of value in our wallet per year (assuming today’s Bitcoin price of US$35,000).’ Vinanz continued to build ‘a Bitcoin mining business that gives shareholders considerable upside leverage for an expected rise in the Bitcoin price as Bitcoin becomes more mainstream in global finance markets and towards and beyond the next halving.’
Mr Lenigas told StockBox earlier this month that the company expected the new miners to be operational ‘by Christmas’, adding that, as the company moves into profit, ‘the corporate plan is to be in the thousands of Bitcoin miners through 2024 and 2025’. Mr Lenigas said the company is ‘aiming for about half of the current Bitcoin price as our breakeven’, stressing the importance of its low-cost model.
The rise and fall – and rise – of Bitcoin
The currency has resumed its journey towards acceptance by the wider financial sector after last year’s well publicised crises. The coin is up some 125pc over the past 12 months, standing at more than $36,500 at the time of writing, recouping the losses it sustained following the failure of the Terra currency last May, which led to the collapse of several high-profile companies, including Sam Bankman-Fried’s FTX exchange and the lender Celsius. A blizzard of enforcement cases and lawsuits against many of the remaining players followed, including Coinbase and FTX-rival Binance, prompting the industry to renew its commitment to accountability. Pledging ‘full transparency’ Binance said that all crypto exchanges should provide proof of reserves, and rival exchange OKX launched its first proof of reserves ’to set a new standard of transparency, risk management and user protection’.
There are new signs of acceptance by mainstream financial institutions. This summer PayPal launched its own stablecoin – a crypto asset whose price tracks that of a more recognised asset, often a conventional currency – in the form of a US dollar-pegged crypto token. And expectations are rising that the Securities and Exchange Commission (SEC) will reverse its long held opposition to the trading of spot ETFs holding Bitcoin, a big step towards the validation of Bitcoin as an established asset class, offering consumers a cheap and safe way to trade the token instead of buying it directly from unregulated crypto exchanges.
The coin’s price has surged over the past month, rising by a third on news that BlackRock, the world’s largest asset manager, has listed a planned Bitcoin ETF at the US securities market’s main clearing house. An updated filing from the US giant stated that an unnamed investor planned to buy shares in the ETF, the common pattern for new or upcoming ETFs in search of fresh capital. The coin rose by as much as 8pc earlier this month on false rumours that the application had already been approved.
The SEC continues to caution that it cannot offer investors reassurance that the Bitcoin market is not prone to being manipulated. But the regulator has been under pressure to shift its position since a Washington court ruled against its rejection of an earlier application by asset manager Grayscale to turn its Grayscale Bitcoin Trust into an ETF. A favourable BlackRock ruling seems likely to open the floodgates: Franklin Templeton, VanEck and WisdomTree have also submitted filings to the regulator. Investment group CoinShares said that anticipation that the green light will be given had spurred investors to commit $179m to digital asset funds over the past few weeks. The SEC’s first rulings on the ETF filings are expected early next year.
Outlook
Prospective investors in cryptocurrencies will need no reminding that Bitcoin is a highly charged, volatile asset. But the prospect of another halving next year, and the issue of SEC-approved funds by major institutions, would seem to augur well for a continued rally in the coin’s value. And Vinanz, with its low-cost, scalable model, field by green energy, appears well placed to offer exposure to higher prices.
The company’s value has surged since it announced it was ramping up its operations earlier this month, more than doubling to rise to 6.75p at the time of writing, moving its market cap to £7.86m. Nothing is certain in the world of Bitcoin, but the stars may be aligned for further gains given the favourable environment likely to persist over the next few months.
