4 days ago, on April 19, the Bitcoin halving happened. “Halving” refers to the number of bitcoin that miners “win” when they unlock a new block of bitcoin on the Bitcoin blockchain. That is to say, before April 19, bringing a new Bitcoin block out of the blockchain got you 6.25 Bitcoin.
Now the “reward,” as it’s called, is just 3.125 bitcoin.
It’s pretty basic supply and demand economics – that when the supply of a thing falls, the price will rise. Bitcoin followed this economic rule, the price of one bitcoin rallied 65% to $71,000 ahead of the April 19 halving (the fourth in its short history).
The Bitcoin haters out there who continue to deny that the cryptocurrency should have any value at all should take note: a currency, commodity, or service that conforms to the basic rules of economics clearly has a role in the economic system. That means Bitcoin has value. And that value is likely higher than where it is right now.
Investors should take note: history shows that the lion’s share of Bitcoin’s price moves come after a halving event. The last time the Bitcoin rewards were halved was May 2020. One Bitcoin was trading for $9,700. 12 months later, Bitcoin hit $58,250…
The time before that was in 2016. From $492, the price of Bitcoin ran 501% over the next 12 months.
We’ve talked about the potential upside for the price of Bitcoin now that the fourth halving has happened. You can read my colleague Christian DeHaemer’s recent Bitcoin analysis for Outsider Club readers here and here. (After all, DeHaemer (or “Hammer” as he’s known), helped his readers make a lot of money when he told them to buy bitcoin at $492 after the 2016 halving.)
But today, I want to tell you about a sneaky way to get exposure to Bitcoin’s upside. Because this sneaky Bitcoin play could end even more lucrative than simply owning Bitcoin itself.
Secret Backdoor Way to Own Bitcoin
Now before I get into this sneaky bitcoin play, I want to be clear we expect a nice run higher for bitcoin. But it’s not reasonable to expect a 501% run like what happened in 2016 and 2020…
A double from current prices to $120,000 or $130,000 is more realistic. And I doubt anybody will be disappointed with a move like that.
However, the sneaky bitcoin play has the potential to do more than simply double your money. The play I’m talking about is the companies that control the supply of new bitcoin being brought to market.
They’re called bitcoin “miners” because they’ve built massive data centers that “dig” new bitcoin out of the bitcoin blockchain system.
At this point, the biggest bitcoin miners have a stranglehold on the supply of new bitcoin. That’s true for two reasons: one, the AI race is making it too expensive to assemble the amount of computing power needed to mine bitcoin. And two, AI has tapped so much electrical power that if you don’t have a secure power source already, you are SOL.
There are a handful of publicly-traded bitcoin mining operations that check both boxes. They already have the computing power in place. And they have signed long-term power supply contracts.
The biggest of these bitcoin miners is a company called Marathon (NASDAQ: MARA).
Marathon currently owns 17,381 bitcoin worth around $1.5 billion. It has also has the computing capacity to mine 400-500 new bitcoin every month. At the current bitcoin price of $66,000, this company can grow its value by $33 million a month…
But that’s at the current price.
If bitcoin moves as we expect, you can just double all those numbers. Marathon could be sitting on $3 billion worth of bitcoin with the ability to add $66 million to its holdings every month.
In other words, Marathon has the potential for exponential growth. And to get a picture of what that could mean for the stock price, check out this 3-year chart:
Yep, Marathon was an $80 stock in 2021. It’s been over $30 recently and currently trades around $19.
You should also know that Marathon was trading at $14.50 just a couple days ago. As I write today, the stock is up 9% to $19.
In other words, investors are already getting into this sneaky bitcoin play.
One thing to note: there are a few publicly traded bitcoin mining stocks you could buy. Because of the challenges for a smaller operation to increase the computing power and the electric power needed, we think it’s best to stick with the biggest mining stocks, like Marathon.
Briton Ryle
Chief Investment Strategist
Outsider Club
X/Twitter: https://twitter.com/BritonRyle
