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It's still based on the assumption that Bitcoin is not a growth asset, and that those investors believe it is. If the investors believe it is a growth asset the

It's still based on the assumption that Bitcoin is not a growth asset, and that those investors believe it is. If the investors believe it is a growth asset there is no problem - they knew exactly what they were buying into. In fact, it is probably a proxy for a Bitcoin ETF or outright ownership of coins; in that case it is doubly true they understand the risk. The argument falls apart without Bitcoin stagnating into obscurity, so the same point is (less) obviously implied.

t_mann 4y ago
The hint is in the other part of the paragraph - investors were likely looking for exposure to Bitcoin (implying that they have positive expectations for its price). Some investors are constrained in what kind of assets they can invest in, so buying stocks of Bitcoin miners might seem like a reasonable proxy for buying Bitcoin outright (similar to how some investors looking for gold exposure actually buy gold mining stocks). The point of this article is that that strategy might be inferior to buying Bitcoin outright because the stocks are overvalued compared to their intrinsic capability of producing Bitcoin (note how Bitcoin price predictions aren't even discussed). It's a classical value-based investment thesis that might lead to the opposite conclusion at different stock prices. The author says that he holds short positions, and I can imagine that he's probably used derivatives to hedge out BTC price movement risk and purely bet on his thesis that those miners' stocks will perform worse than the price of Bitcoin itself.
- mattwilsonn888 4y ago
  Well then his point about Bitcoin not being guaranteed as a growth asset is irrelevant - that assumption applies to any investment derivative of Bitcoin or obviously, Bitcoin itself. The real argument is what the returns on mining stocks are compared to ownership, and the magnitude of that difference is what's important; there should be some difference (investors are paying for not having to custody Bitcoin, among whatever regulatory benefits they may get from using the stock market) and those benefits are not quantified in this article as far as I can tell.
  - t_mann 4y ago
    What this guy's doing is called 'talking your book'. It's typical behaviour for shortsellers, they find a company that has some problems that the market hasn't realized yet, they quietly build up a short position and then go public with their report, trying to convince other investors of their idea, driving down the price and earning a return on their short position. It's not pro bono educational work.
    - mattwilsonn888 4y ago
      I guess HN only has an appetite for financial advertising when its bearish on crypto. I don't understand why it should tolerate such pieces at all, but they love to hate crypto here by any means necessary.
      - deleted 4y ago
        [deleted]

t_mann 4y ago

The hint is in the other part of the paragraph - investors were likely looking for exposure to Bitcoin (implying that they have positive expectations for its price). Some investors are constrained in what kind of assets they can invest in, so buying stocks of Bitcoin miners might seem like a reasonable proxy for buying Bitcoin outright (similar to how some investors looking for gold exposure actually buy gold mining stocks). The point of this article is that that strategy might be inferior to buying Bitcoin outright because the stocks are overvalued compared to their intrinsic capability of producing Bitcoin (note how Bitcoin price predictions aren't even discussed). It's a classical value-based investment thesis that might lead to the opposite conclusion at different stock prices. The author says that he holds short positions, and I can imagine that he's probably used derivatives to hedge out BTC price movement risk and purely bet on his thesis that those miners' stocks will perform worse than the price of Bitcoin itself.

mattwilsonn888 4y ago
Well then his point about Bitcoin not being guaranteed as a growth asset is irrelevant - that assumption applies to any investment derivative of Bitcoin or obviously, Bitcoin itself. The real argument is what the returns on mining stocks are compared to ownership, and the magnitude of that difference is what's important; there should be some difference (investors are paying for not having to custody Bitcoin, among whatever regulatory benefits they may get from using the stock market) and those benefits are not quantified in this article as far as I can tell.
- t_mann 4y ago
  What this guy's doing is called 'talking your book'. It's typical behaviour for shortsellers, they find a company that has some problems that the market hasn't realized yet, they quietly build up a short position and then go public with their report, trying to convince other investors of their idea, driving down the price and earning a return on their short position. It's not pro bono educational work.
  - mattwilsonn888 4y ago
    I guess HN only has an appetite for financial advertising when its bearish on crypto. I don't understand why it should tolerate such pieces at all, but they love to hate crypto here by any means necessary.
    - deleted 4y ago
      [deleted]