The price of Bitcoin has fallen significantly from its peak… perhaps foreshadowing a quick collapse. Perhaps short positions in Bitcoin will work out quickly. But who knows… short positions may turn out to be extremely dangerous as Bitcoin may skyrocket even more. Here are some quick notes…
For the image above, the columns are:
- Green = shortable, dark green = no borrow, red = Interactive Brokers won’t let you short it.
- Borrow rate (retail rates).
Futures: You can short Bitcoin directly, if your broker allows it.
GBTC and ARKK: This is an ETF that holds Bitcoin, similar to how GLD works. Here is a Google spreadsheet to calculate its sizable (~40%) NAV premium. Do your own homework as the spreadsheet model may be wrong. You can make a copy of it to edit it. ARKK is an ETF that has a small portion of its NAV in GBTC. See their website for holdings information.
TSM, NVDA, and AMD: These are real companies with (very) small amounts of exposure to cryptocurrency mining. TSM is a contract manufacturer for crypto ASICs (application-specific integrated circuits) designed by other companies. ASICs are computer chips specifically designed for one task, e.g. they can mine cryptocurrencies extremely well but you cannot check your email on them. Specialized chips are far more (cost-)efficient at their task than relatively less-specialized chips (though the upfront R&D costs are high). ASICs are more specialized than GPU chips from AMD and NVidia, which are more specialized than the general-purpose CPU in your computer.
It is likely that the cryptocurrency market drives only a very small portion of the revenues of these three companies; shorting these companies based on crypto is likely a poor thesis. They are on my list simply because they have (very) minor exposure to crypto.
OSTK (NASDAQ listed, 1.5B mkt cap): Overstock is an online retailer that has worked on many side projects… out of that came TZero and a blockchain-based solution for securities lending. I have a series of Tweets on OSTK that links to the bull thesis at the end.
RIOT: This company wins points for being colorful. As this CNBC article points out: Riot turned down a CNBC request to appear on “Fast Money.” “No one at the company has been able to get in touch with the CEO,” a Riot spokesperson said.
The rest of the list consists of stocks that have announced entries into cryptocurrency-related markets in some form or other. Most of them are colorful… let’s just leave it at that.
*Disclosure: I have a very small short position in OSTK. I am a tool… I am shorting OSTK to bet on Bitcoin sentiment and not really on OSTK’s fundamentals.
**DISCLAIMER: Bitcoin is highly volatile and you can lose a lot of money shorting it. Please, please do your own homework.
This blog post is not that well researched. You definitely should NOT use it as investment advice.