Value investor Mike Alfred recently shared his insights on Bitcoin mining firms on Twitter, emphasizing their potential as an attractive investment opportunity in today’s market.
Alfred states these companies possess significant operating leverage as Bitcoin prices rise. While many conventional investors might view them as risky, he believes that mining firms represent one of the best risk-off sectors in the market.
Alfred points out that there are no definitive rules for determining value in equity markets, as it often depends on factors such as price. While many mining companies were overvalued in 2021, he argues that some are now undervalued in 2023, highlighting the market’s cyclical nature.
As the S&P and Nasdaq experience declines of over 1.2%, Alfred suggests that now might be an opportune time to invest in high-quality infrastructure operators, especially when trading significantly below their intrinsic value. He notes that most traditional investors have become complacent, opting for middling returns in seemingly safe assets rather than seeking exceptional risk-adjusted returns.
Alfred advises investors to buy quality companies when their earnings appear dismal, recommending a review of their earnings in 2025 to understand their full-cycle potential. He emphasizes that the best Bitcoin miners are essentially skilled infrastructure developer-operators who manage various aspects of the mining process, such as securing land, obtaining power, building data centers, and directing computing power at the Bitcoin network.
In Alfred’s view, the simplicity of their business model, combined with the high operating leverage at increasing Bitcoin prices, makes these firms a compelling investment opportunity.
According to data from TradingView, currently (as of 7:25 a.m. UTC on March 19) Bitcoin is trading at around $27,027, up 63% in the year-to-date period.