Before You Buy Bitcoin, Read This
It's said that loose lips sink ships.
But for Samuel Brannan, his big mouth made him a millionaire.
Upon the discovery of California gold, Mr. Brannan ran through the streets of San Francisco yelling, “Gold! Gold on the American River!”
But Brannan had a great reason to spread news of the discovery rather than dig for gold himself.
You see, in addition to owning the main newspaper in San Francisco, Mr. Brannan also owned the only supply store between the city and the gold fields.
And just prior to his one-man spectacle, Brannan bought up all the picks, shovels, and pans he could find.
He paid $0.20 each for the pans, then sold them to hopeful prospectors for $15.00.
In just nine weeks, he made $36,000.
Inflation-adjusted, that’s over $1,000,000!
Brannan was the California Gold Rush’s first millionaire.
|Samuel Brannan and his store|
Brannan wasn’t a ’49er. He was a ’48er.
He recognized an incredible opportunity: not mining the gold, but mining money from the hopeful miners.
And he almost singlehandedly shaped our perceptions of “pick and shovel” investing.
Today there's a new gold rush rapidly unfolding. And there are miners who are going to need picks and shovels.
But I'm not talking about literal gold. I'm talking about Bitcoin and other cryptocurrencies.
(I recently put together a brand-new video report as an easy guide for new investors to Bitcoin. Check that out here if you're not already familiar with the digital currency.)
Bitcoin has already returned some investors gains up to 20,000%. And while I think it's unlikely Bitcoin can go up another 20,000% from here, there are still massive opportunities in the “picks and shovels” of Bitcoin.
You see, Bitcoin needs to be digitally created. Bitcoin is created when it is electronically earned (or “mined”) using specialized hardware, generally called “miners.” Among the most popular digital currency miners on the market today is Bitmain's Antminer S9, shown below.
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This hardware solves highly complex mathematical calculations to confirm previous Bitcoin transactions. As a reward for this service, the owner of the mining hardware earns a transaction fee in the form of new Bitcoin. This is essentially how new Bitcoin is created.
This mining hardware, like Bitmain's Antminer S9 above, is the “picks and shovels” of the Bitcoin rush. But there's one problem...
Bitmain is a private company. We can't invest in it.
There are a few other consumer-grade Bitcoin mining hardware providers, including Canaan Creative and Spondoolies-Tech. But there are no publicly traded companies that focus specifically on producing Bitcoin mining hardware.
But if we look a little deeper, we might find what we're looking for...
You see, the most important feature to the mining hardware is the semiconductor chips inside.
Bitcoin miners use what are called application-specific integrated circuit (ASIC) chips. These chips are absolutely vital to the mining hardware. They are essentially the brains of the whole operation.
ASIC chip manufacturers currently include firms like Analog Devices, Inc. (NASDAQ: ADI), Maxim Integrated Products, Inc. (NASDAQ: MXIM), and Qualcomm Inc. (NASDAQ: QCOM).
But I've found one company that produces nearly 80% of all the ASIC chips that are going into these miners.
Now, here's the best part...
It doesn't matter whether the price of Bitcoin or other digital currencies goes up or down; the system will always need these ASIC chips. So the companies that create these special chips are in a great position.
Bitcoin and cryptocurrency miners are creating money.
Let me ask you this...
What is the demand for money?
Is it anything less than infinite?
Owning ASIC chip manufacturers is akin to owning the means of production for money. You own the money and the printing press.
I need to wrap up for today. But if you're interested in learning more about this ASIC chip stock, just click here.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
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