BITCOIN SERVICES I COM USD0.001 (OTCMKTS:BTSC) currently trades for just shy of $0.04 a share. This gives the company a market capitalization of $14.5 million. In the grand scheme of things, this might not sound like a lot, but given that Bitcoin Services traded for $0.004 a share at the start of the year, and has subsequently appreciated in value to the tune of close to 1900%, it’s difficult to look at it as anything but a real runner.
We first highlighted the company back in February when it traded for $0.005 a share. At the time, our thesis was relatively simple: interest in bitcoin was heating up, and as markets sought to pick up an exposure to the digital currency’s ever-increasing price, companies that were able to demonstrate some degree of connection to bitcoin, while also offering publicly traded shares, should draw derivative benefit. To put this another way, it’s not that easy to buy bitcoin, at least not for the masses, but it is relatively easy to pick up the shares of a company operating in the space.
And as it turns out, that’s exactly what happened.
Bitcoin Services, while not developing operationally to any real degree (or at least any noticeable degree), has run up in value in parallel to the price of bitcoin versus the US dollar.
So with the company now trading where it is, the question becomes: what’s next?
As noted last time, there are three operational arms associated with this company. One is a small mining operation (to serve up a bit of perspective, the company has four Antminer devices compared to the 400 of John McAfee’s MGT Capital Investments Inc. (OTCMKTS:MGTI)). Another is an escrow service, which is probably where the majority of the value lies right now. The third is something called blockchain software development, which as things stand is nothing more than a sound bite from our perspective.
The latest announcement, which hit press on May 3, details the fact that Bitcoin Services began mining Monero in the 1st quarter of 2017. In said release, management claims that Monero is one of the top digital currencies with a market cap of over $300 million. This has actually now risen to close to $800 million, but saying it’s one of the top digital currencies is a stretch. CoinMarketCap puts it at number eight at current capitalizations. Even if it was number two, however, the fact that the company is mining it is far from a sound investment thesis.
Basically, this company has done nothing since we previously covered it, at least, nothing that has warranted a press release.
But we’re going to repeat ourselves here – the fact that it’s operationally inactive (for all intents and purposes) doesn’t matter right now. At last count, the price of one bitcoin hit $2350. It’s making fresh highs daily, and as popular media picks up on these highs (as we have seen it do more and more over the last couple of weeks) traders are going to want to get an exposure to the run. So long as bitcoin continues to rise in price, any company offering said exposure is going to rise in parallel to the digital currency. This seems to be one of the market’s favorite bitcoin plays right now, and that stands it in good stead for continued appreciation going forward.
This is a risky play. Keep that in mind. There’s really nothing to support the current run other than speculative capital inflow, and when bitcoin stops running traders are going to pull their profits off the table. While the bitcoin party continues, however, and there’s every reason to think it will near to medium term (unlike in BTSC, there are fundamental developments in the crypto space that are driving the sector’s gains), this stock is going to draw collateral benefit.
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Disclosure: We have no position in BTSC and have not been compensated for this article.