Second Gate Advisory

🚨Published a new report on @Bitcoin_Depot $BTM today on @blockspace blockspace.media/insight/bit… Read below for some highlights from the report 👇

🧵As ASICs continue to become more efficient, cheap power actually becomes a materially less relevant factor compared to the acquisition cost of ASICs. This is why I’m bullish on @bitdeer with a longer term view. Assuming $BTDR can successfully achieve 5 j/TH efficiency with the A4 they will be uniquely positioned to be able to generate far superior IRRs and returns on capital versus other miners. Assuming that Bitdeer could manufacture the A4 at a cost of $15 per TH, they would be able to achieve a faster payback period by 103 days with $14 cent power vs a miner with $2 cent power if they paid $25 per TH for the same machine assuming a hashprice of $30 per PH/s. That’s pretty mind boggling. The breakeven hashprice per PH/s even at $14 cent power cost for an ASIC with 5j/TH efficiency is $17 per PH/s which represents a ~70% decline in hashprice from current levels, which is almost hard to fathom given that there is a chance that this machine could exist in the wild next year. In my personal opinion it’s incredibly difficult to overlook or understate the outright competitive advantage of manufacturing your own ASIC at the forefront of the efficiency curve. Execution is key but as milestones are achieved valuation repricing is certainly warranted.

Excited to finally launch a new venture with @_amanda_fab, Second Gate Advisory! Check out the website secondgate.io/ and follow us @SecondGate_

Why should you care about ordinals, metaprotocols and new L2 concepts if you’re a Bitcoin miner? Because utilization of blockspace will drive fee volatility and even brief periods of extreme volatility can materially improve miners revenue in the same way that extreme weather events can allow flexible load resources to profit substantially from being able to liquidate their power hedge. The 14 blocks during the @babylonlabs_io fee spike generated more in fees than the previous 1,008 blocks combined Follow @SecondGate_ for future insights

How Bitcoin Mining Capex Requirements and Payback Periods compare to High Performance Computing Despite being orders of magnitude cheaper per MW to develop Bitcoin mining sites, HPC has a materially faster payback based on current lease rates for compute of Nvidia H100s. This analysis underpins some of the fundamental differences between the two businesses and the extremely important need for low cost power for Bitcoin mining. It would take sub $20 per MWh power cost to generate the same payback period as HPC given a $47 PH/s hashprice operating S21 Pros for $21 per TH and $300k per MW buildout cost. This analysis also highlights that the highest and best use for large scale sites will more than likely be HPC/AI should these economics have sustainability, pushing miners to pursue smaller scale sites with stranded energy or other unique power situations. Follow @SecondGate_ for future insights

Hashprice would need to increase 64% using the latest generation ASIC to equate to average HPC lease rates according to CBRE’s new H1 2024 Datacenter Trends report. Average HPC lease rates are $239 per MWh or $174,060 per MW/Month. Follow @SecondGate_ for future insights

🧵Bitdeer $BTDR currently trades at a deep discount to the value of the sum of its parts. Its 2.5 GW power pipeline and burgeoning ASIC manufacturing business puts it in a class of its own and could be poised to join the ranks of the big 4 public miners ( $CORZ, $MARA, $CLSK, $RIOT ) over the course of the next 18 months. Dive into why in my research note linked below: dropbox.com/scl/fi/okpxmlo6w… Disclaimer: Not financial advice dyor