Top 3 Crypto Mining, Value, Growth and Momentum stocks

As 2021 goes into the record book, the term cryptocurrency has continued to burst out of the shadows and seep into mainstream vocabulary. Even the securities and exchange commission (SEC) has approved its first cryptocurrency centric Exchange Traded Fund (ETF).

Unlike fiat currency, which is minted by the government that owns it, cryptocurrency (known as coins) are mined by crypto mining firms, by solving complex computational problems. Cryptocurrencies then utilize blockchain technology to ensure secure and decentralized record of transactions, without the need for a trusted third party (like a bank). 

Matthew Johnston, recently reported on Investopedia, that:

Crypto mining stocks, as represented by the Amplify Transformation Data Sharing ETF (BLOK), have outperformed the broader market. BLOK has provided a total return of 39.3% over the past 12 months, above the Russell 1000's total return of 23.6%. 

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A quick refresher...

As a refresher, Value stocks represent an asset class where the value is usually higher than the market. Growth stocks, carry higher risk and hence are expected to outpace the market. Momentum stock are assumed to have an event that continues to give them an advantage, leading to outperforming the market.  

How this is applied to crypto mining...

Similar to Value, Growth and Momentum driven stocks, Johnston suggested that BTCM, HUT, and BITF were top for value, growth, and momentum, crypto mining stocks respectively. Johnston research has shown that:

• BTCM, has a 12-Month Trailing Price/Sales ratio of 0.7. This implies, the stock is currently undervalued and a good candidate for Value buy.
• HUT has seen a 825.6% Year-over-Year (YoY) growth, and such has been tagged as a growth stock.
• BITF has had 323.8% return in its trailing 12 months, and therefore classified as a momentum stock.

Disclaimer:

This is for informational purposes only and should not be considered investment advice or recommendations to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice.

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Elon Musk to pay over $11 billion in taxes, where are the rest of the billionaires?

We're pretty sure that no one is rushing to dethrone Elon Musk of his new title: Highest Tax Payer to the U.S. government of all time - $11 Billion USD. We're also quite confident that CEO of Tesla, SpaceX, The Boring company...etc, does not relish this accomplishment, as compared to being recently named Time’s Person of the Year (for 2021).

The pandemic has brought to light the grave issue of widening chasm between those who are struggling during the COVID-19 pandemic and those who have seen their net worth balloon during the past two years. According to inequality.org, as of Oct 18th 2021:

America’s billionaires have grown $2.1 trillion richer during the pandemic, their collective fortune skyrocketing by 70 percent — from just short of $3 trillion at the start of the COVID crisis on March 18, 2020, to over $5 trillion on October 15 of this year, according to Forbes data analyzed by Americans for Tax Fairness (ATF) and the Institute for Policy Studies Program on Inequality (IPS).

Forbes list of Real-Time Billionaires, at the time of this writing, shows Top 15 U.S Billionaires wealth growth percentage, and it's an eye opener to say the least. 

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Name	Net Worth Mar. 18, 2020 ($ Millions)	Net Worth Oct. 15, 2021 ($ Millions)	19 Month Wealth Growth ($ Millions)	19 Month % Wealth Growth
Number of Billionaires	614	745
TOTAL	$2,947,500	$5,019,395	$2,071,895	70.3%
Elon Musk	$24,600	$209,357	$184,757	751.0%
Jeff Bezos	$113,000	$192,234	$79,234	70.1%
Bill Gates	$98,000	$132,415	$34,415	35.1%
Larry Ellison	$59,000	$124,533	$65,533	111.1%
Larry Page	$50,900	$120,718	$69,818	137.2%
Mark Zuckerberg	$54,700	$117,570	$62,870	114.9%
Sergey Brin	$49,100	$116,340	$67,240	136.9%
Warren Buffett	$67,500	$102,165	$34,665	51.4%
Steve Ballmer	$52,700	$96,912	$44,212	83.9%
Jim Walton	$54,600	$65,391	$10,791	19.8%
Alice Walton	$54,400	$64,473	$10,073	18.5%
Rob Walton	$54,100	$64,188	$10,088	18.6%
Michael Bloomberg	$48,000	$59,000	$11,000	22.9%
Phil Knight	$29,500	$57,949	$28,449	96.4%
MacKenzie Scott	$36,000	$55,488	$19,488	54.1%

Elon Musk sits at the top-of the list with a whopping 751% wealth growth. Top-3 are rounded off by Bezos and Gates. The next on the list are founders of Oracle, Google and Facebook (Meta).

Democrats, including senators Bernie Sanders and Elizabeth Warren, have suggested that billionaires have enriched themselves on the backs of taxpayers, whilst refusing to pay their fair share of taxes. Warren even went so far as to brand Musk a “freeloader,” leading to a Twitter war between her and Musk, in which Musk called her “Senator Karen.”

The Tax Justice Network, a nongovernmental advocacy group, estimated that the world’s population could be fully vaccinated three times over with the $483 billion in taxes not paid by multinational corporations and wealthy individuals. The latter, they say, have evaded $171 billion in tax. In June ProPublica revealed the ultra-wealthy barely paid any taxes, referring to the likes of Elon Musk, Jeff Bezos, and Warren Buffett. 

“They have no interest in the truth,” Musk told Recode’s Kara Swisher. "My top marginal tax rate is 53%, so I don’t think that’s particularly low, and it’s going to go up next year.”. 

Musk has been shedding off Tesla stocks, leading many to speculate on the future of Tesla. To curb the speculation, Musk clarified that the “only way” for him to pay taxes is to sell stock. That's because he does not draw salary or bonus from any of his firms, and his fortune is tied solely to his equity holdings.

Whilst, it's quite interesting that Musk has become the poster child for tax evasions, even with his $11B USD tax bill, others on the list have yet to disclose how or if they would pay taxes.

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Crypto is becoming mainstream, are you ready for it?

Crypto currency is starting to become mainstream. Is that a controversial statement or possibly conjecture, maybe yes, albeit, there is increasing evidence to suggest the hypothesis holds true. Here are a few evidentiary statements:

AMC Movie Theater, starts accepting crypto as payment

Some universities will start accepting crypto in form of tuition

Mastercard will start allowing crypto as incentivization

SEC has approved an ETF (Exchange Traded Fund) linked to crypto future trading

Mayor of Miami wants to get paid in Bitcoin 

What does this all mean? 

Going back to the opening statements, this implies that a technology is starting to mature and becoming mainstream. 

For sake of clarity, Bitcoin is only one type of asset class in the crypto currency space. Blockchain is the technology that enables different crypto asset classes (e.g: Ethereum, Dogecoin). Blockchain in itself is not all the same. Some are completely secure and closed, others are public and while are some hybrid.

The so what of it then?

In business & technology cycle, there are usually innovators, early adopters, early majority, late majority and then laggards. Between early adopter and early majority, there is usually a chasm, crossing it, or lack thereof, can makes and/or breaks the business. This especially holds true for any technology. Due to this primary reason, early startups go for growth vs profitability.

What these few examples suggest is that crypto is now on its way to crossing the chasm into early majority. Furthermore, it's evident that crypto is not specific to an industry type, rather most, if not all segments/industries are starting to leverage this technology.

On top of aforementioned, decentralized finance (DeFi) will also leverage the technology and all the asset classes to ease day-to-day finance. As such, it's high time to make crypto, DeFi part of vernacular.

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The next trillion dollar opportunity for startup capture; Instant Pay

 What’s the first, real-world, lesson taught in any business centric class - fix a problem (opportunity) that someone is willing to pay for. Now, identifying the problem or equally important finding a solution that has differentiated value, is usually not easily surmountable. The reason for this quick level set is to talk about a potentially Trillion dollar opportunity.

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Problem statement: 

In the US, there are more payday loan providers than McDonalds. Good for payday loan providers, but bad for people. A survey report has reported that 42% of full-time workers are unable to meet their monthly obligations of household expenses. This state of affairs is tied to antiquated ways how employees get paid at a pre-defined cadence, say bi-weekly. According to EY estimates, almost a trillion dollars is tied up in payroll systems and 70% of global workers are paid either bi-weekly or paid monthly.

An opportunity on the horizon? 

EY estimates an employee turnover of 20%, related to financial stress. A study by Harris poll has found that 80% of the workers in the US would like to get money in their accounts as earned. Furthermore, it was also identified that with Gen-Z becoming the largest group by 2026, immediate access to capital, as part of earned wages, will become a key differentiator to stay with a firm. 

Whilst most large firms may or may not be aware of this, several On-Demand pay apps are starting to address this gap.

On-Demand Pay in Motion:

Even, FlexWage, PayActiv, Instant Financial are some of the on-demand pay apps available that are addressing the need for On-Demand. 

Walmart’s 20% workforce is leveraging the Even app, to avoid payday loans. Walmart covers the cost of using the app for both hourly and salaried workers. Employees can access wages early, up to eight times per year for free. After that, they pay $3 per pay period to cover transaction fees and for features that help to set savings goals and create a budget. Whilst this is not On-Demand pay, it’s a step in the right direction.

Sprinkle Cupcakes is partnering with ADP, who in turn is leveraging the DailyPay app to pay employees as they complete a shift. Employees gain access to their pay as early as 3 a.m. the next day.

For budding entrepreneurs, the pandemic, coupled with the great resignation, Instant or On-Demand pay provides a great avenue to launch your next startup.

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