Derivatives

Buying Bitfarms options

I'm buying BitFarms options, a Bitcoin mining company. With Bitcoin at $170K in mid-2025, I'm targeting for 1300% performance per option because I believe it is undervalued.

The Yuppie Investor

May 5, 2024 — 4 min read

I'm buying 7 BitFarms options

with a strike of 5$ and 7.5$ which expires January 2026.

You almost never start valuing a company or stock with a blank slate.

All too often, your views on a company or stock are formed before you start inputting the numbers into the models and metrics that you use and, not surprisingly, your conclusions tend to reflect your biases.

Professor Aswath Damodaran

Thesis :

With Bitcoin projected to reach $170,000 by mid-2025, I'm targeting $15 per share, aiming for an average profit of $815 with an average cost of $61, resulting in a total return of 1300% per trade in average.

I'm confident that BitFarms will withstand the halving.
We're nearing to Bitcoin's local bottom (expecting two more tumultuous months before thrill).

Why I believe BitFarms is undervalued :

Hashrate (mining efficiency) set to triple in 2024.
Revenues have been steadily rising over the last 12 months
- Holding 830 BTC as of April 2024, having sold only 342 on average a month over the last 12 months and at progressively higher prices - a bullish catalyst.

I'm not concerned :

Because Bitcoin will be in a consistent uptrend from the end of June onwards until mid-2025 (when I plan to sell).
Targeting $170,000 per BTC by mid-2025 should cover operating costs, not to mention the fact that Bitfarms has paid off most of its debts.

Above $55,000 per BTC, Bitfarms generates profits for each BTC mined, providing flexibility during periods when BTC is under $55,000 for a few weeks.
I consider BitFarms undervalued due to strong incoming cash flows, low debt resulting in a low price relative to fundamentals.
Strong financials :
- Bitfarms sells fewer Bitcoins (at progressively higher prices) and revenues have steadily increased over the last 12 months, providing sufficient cash to cover low debt, operating costs, and planned expansions of BitFarms (hashrate).
Dilution : When a company issues new shares, increasing the total number of outstanding shares, potentially reducing the ownership percentage of existing shareholders.