Bitcoin or ethereum? Both of the leading cryptocurrencies are currently getting hammered in trading, but which one has real staying power beyond the crypto-fad? Go for bitcoin, says Thomas George of investment firm Grizzle, who backs bitcoin miner Hut 8 (TSXV:HUT) over ethereum-mining HIVE Blockchain (TSXV:HIVE).
Ethereum reached a major milestone today by hitting 100 million tokens in circulation, even as its value of dropped below the US$500 mark, well off the US$1,400 high achieved earlier this year.
Bitcoin hasn’t fared much better. There are now 17 million of a possible 21 million tokens in circulation, with miners having to work that much harder to earn tokens as the supply continues to dwindle. In terms of price, bitcoin has dipped below US$6,500, a low last seen in early November 2017.
But beyond the daily ups and downs in token prices, the underlying issue is whether or not the cryptocurrencies will have practical utility over the long run, and, relatedly, whether companies mining bitcoin and ethereum will survive and thrive.
Last summer, Vancouver-based HIVE Blockchain (TSXV:HIVE) became the first publicly traded blockchain company and has quickly established itself in ethereum mining through sites in Iceland, Sweden and, more recently, Norway.
By way of contrast, the Bitfury-backed Hut 8 Mining Corp began trading just a few months ago, while in May it reported its first quarter ended March 31, 2018, financials, boasting revenues of C$11 million and an Adjusted EBITDA of $7.7 million (a profit being rare in these still-early days of crypto-mining).
Between the two companies, George says that while the ethereum platform itself has value, he has less faith in the token, which he says could go the way of the dodo bird.
“We are bullish on bitcoin mining,” George told BNN Bloomberg Tuesday. “We believe it’s here to stay for the long term. HIVE is different in that they’re very much focused on Ethereum, which is the other big cryptocurrency. We think there’s tremendous opportunity in the platform for Ethereum.”
“Many times, people ask, should you own the currency or should you own the company that mines that? We would take the view that in Ethereum’s case and HIVE, you own Ethereum and you wouldn’t own HIVE,” he says. “Our preference is for Hut 8.”