Puts on MARAHello friends.
We bought some 10 puts on MARA that expire on 5/19 with a strike of $11 for a price of $2.05 each. Mainly we are doing this as a proxy for shorting Bitcoin with puts. Since the crypto options market is illiquid while the MARA options market is liquid, and since MARA is strongly correlated with Bitcoin, this works well. MARA is correlated to Bitcoin because they are a mining company.
As a result of being a Bitcoin mining company, they have performed terribly and will almost certainly continue to do so. This part is more of a long-term idea, but I believe that bankruptcy is absolutely *programmed* for 99% of these Bitcoin miners, especially ones like MARA that are consistently eating enormous losses and are saddled with back-breaking debt. This trade is not particularly based on these long-term ideas, on account of being such a short-dated trade. For our longer-term trade, we plan to short the heck out of Bitcoin miners when they reach their expected peak around EOY. We're talking massive size, because I'm so sure about it. This current trade is small size for me. Only 10 contracts.
There are three long-term factors that will drive all Bitcoin miners to zero:
Innovation:
The Bitcoin hash rate goes up rapidly over time. On this day last year, it was 226M TH/s. Today it is 350M TH/s. That is an increase of over 50%!! Hash rates have been growing exponentially over time as we have innovated and improved computers. I'm very confident that this trend will continue. The reason this is lethal for Bitcoin miners is that their technology becomes outdated over time. With a 50% annual increase in hash rate, your current cutting-edge money printer miners are going to be totally irrelevant and worthless in 2 years once there is yet another new wave of miners that are 2X better and that totally *dominate* your miners and drive them into deep unprofitability. It's expensive to buy that new hardware, and this is a constant drain on miners. The higher the hash rate goes, the harder it is to mine bitcoins.
Bitcoin price falling:
The Bitcoin bubble is over. I'm enormously confident that Bitcoin prices will fall over the coming years. This is bad for Bitcoin miners for the obvious reason that they will be selling their coins for a lower price, and pocketing even bigger losses as a result.
The Halving:
The amount of Bitcoin that miners can produce will be slashed in half again in approximately 337 days. So around a year. This is an incredibly important factor. It should effectively double the price of producing a Bitcoin.
Let's say MARA is mining 1 Bitcoin for a net price of $35,000 currently and is losing $5,000 on each coin by selling them at a price of $30,000. Well, after the next halving, they are mining 0.5 Bitcoin for the SAME price of $35,000. So their actual price is $70,000 per coin. Their loss goes from $5,000 to $40,000 per coin. That isn't even double in this case, it's eightfold. And the Bitcoin price won't go up due to the halving. Yes, that has happened in the past. However, that was during the bubble phase. Now the bubble is over, and it's down only for Bitcoin. The argument that a slower increase in the supply of Bitcoins will drive the price upwards is half as relevant with each halving. Now, at a point, where over 19 million out of the 21 million total Bitcoins have been mined, there is hardly any argument that supply is important for price. The singular real factor of importance for Bitcoin prices is DEMAND. In other words, how many fools are willing to buy it? And let's be honest, with a Coinbase SuperBowl advertisement, you've reached about the peak for that factor. Where are you going to find another couple of billion morons with money?
With all of these forces operating against MARA and other Bitcoin mining companies, it will be amazing to see them all go bankrupt.
Think of it as mother nature purging the world of poison.
And make no mistake, Bitcoin is poison. The three poisons of the mind in Buddhism are greed, delusion, and hate.
Almost all Bitcoiners I've seen are greedy in the sense of 'Screw you, I've got MINE, and I'm going to be the king of the New World when Bitcoin becomes the global currency.'
They are also almost all delusional, believing in things that are just obviously untrue in the same way that religious people operate. For example, they believe that the price going up in a perfectly repeated cycle indefinitely is a reasonable assumption, that wasting energy and technology on mining Bitcoin is totally necessary to secure the network (meanwhile you could run the Nano network with a single windmill for probably the entire earth and with no needless mining), etc. Lots of inherently false beliefs. They will excuse the authoritarian brutality and lack of human rights under Bukele while claiming to be libertarians.
Most importantly, Bitcoiners are hateful. They violently hate all 'altcoins', and they rail against the banks without even knowing what a bank is or how currency creation actually works. They resent anyone who refuses to buy into their scheme.
Because of this, all rational people should cheer and celebrate the demise of Bitcoin and it's supporters as a win for the environment and society at large.
