Put simply, a cryptocurrency is a decentralized digital currency touted as an alternative to “fiat” currencies (paper money), which are not backed by a commodity and are controlled by central banks around the world.
However, even cryptocurrencies are not backed by a commodity, and their attraction as a “store of value” likely stems from their limited supplies and freedom from government control.
It is primarily because of their fixed supplies that make some market observers opine that cryptocurrencies are better as stores of value than gold.
Introduced to the world in the aftermath of the global financial crisis in 2009, Bitcoin (BTC) is the world’s most popular and most valuable cryptocurrency.
China, because of the widespread availability of low-cost electricity and the presence of big cryptocurrency mining companies, hosts much of the infrastructure that power cryptocurrencies.
ARE CRYPTOCURRENCIES HERE TO STAY?
While there’s still a lot of debate about the future of cryptocurrencies, big mutual funds and hedge funds have started to invest in crypto and blockchain technology stocks.
However, major central banks and regulators have so far taken a more lukewarm attitude.
The U.S. probably feels the most threatened by crypto because it could challenge the dollar’s dominant role in international trade and finance.
Estimates for the growth of the cryptocurrency market vary widely, but most market observers expect huge growth this decade – from a market size of about USD237 billion in 2019.
Some of the big factors likely to drive this growth are growing investor interest, increasing remittance from industrialized to developing countries, and increasing acceptance of cryptocurrencies by regulators.
Since cryptocurrencies are new technologies that are not yet widely adopted, most crypto stocks are small caps.
One such company, which aims to be a market leader in the provision of low-cost power to crypto miners, is Canada-based Link Global Technologies (OTCPK: LGLOF; CSE: LNK).
LINK GLOBAL TECHNOLOGIES: CREATING VALUE WITH LOW-COST CRYPTOCURRENCY MINING
Founded in January 2018 and IPOed in November 2019, Vancouver, Canada-based Link Global, formerly known as Link Blockchain Technologies Inc., is a cryptocurrency mining and data hosting services company.
The company is highly focused on differentiating itself in the marketplace as a low-cost crypto mining solutions provider.
In its July 2019 Initial Public Offering (IPO) prospectus, the company stated that its strategy was to become “a low‐cost energy, mass scale cryptocurrency mining infrastructure hosting facility.”
While it mines its own Bitcoins, it also provides – for rent or purchase – physical cryptocurrency mining infrastructure and operating expertise for other companies in the cryptocurrency space.
It currently has two cryptocurrency mining facilities.
The primary one is a leased facility in Boardman, Oregon. This scalable facility has 2.4MW of power onsite to power 500 bitcoin mining computers.
The other facility is in Beaver Falls, British Columbia.
In October 2020, it opened new mobile data hosting centers in Edmonton, Alberta, and hinted it may relocate the aforementioned existing mining facilities to Alberta to take advantage of lower power costs.
The factors that make Link Global a compelling investment are competitive advantages, diversified revenue base, and experienced management.
According to the company’s July 2019 IPO prospectus, the company has the following key competitive advantages:
- Flexibility of the Boardman Lease: While most of the company’s competitors are bound to monthly contracts for locations either for rent or power use, the company can respond to market conditions with its flexible Boardman Lease that has no maximum or minimum use requirements;
- Current (data) hosting center is located in one of the most reliable and low‐cost power grids in North America, as opposed to a more saturated and smaller power grid;
- The Company currently has the expertise to pursue its plan to build and sell semi‐portable data warehouses, or containers and skids, into the marketplace, which could add to the Company’s ability to generate revenues;
- The Company plans to provide all‐in data hosting services;
- By providing physical infrastructure (for rent or purchase) and support services to outside parties (for fees), the Company expects to defray the costs associated with securing properties with low‐cost power that will ultimately provide a hedge against the risk of future adverse price fluctuations in power.
DIVERSIFIED INTERNATIONAL REVENUE BASE
The company already offers data hosting to complement its cryptocurrency mining business.
In November 2020, the company announced an expansion of its renewable energy solutions from Canada into the international market with a deal to provide clean energy from flared natural gases in Iraq.
Chart of LGLOF
Lglof has held up through its downtrend line from its last high and could be poised for more upside.
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