One of the DTM5’s current holdings is Hive Blockchain Technologies which trades on the TSX Venture exchange with the Symbol HIVE.

Some background > After identifying ‘Crypto’ as a primary sector for the DTM5, I started rooting around different markets, attempting to find publicly traded companies, ETFs, etc. participating in the space.

To my surprise, the pickings were (and still are) slim! There are a handful of early stage companies, focused on either Crypto mining or other areas of the blockchain ecosytem. There are a range of large cap tech and finance companies, experimenting in the space in a minor way or adding Crypto to their balance sheets or blockchain to their business processes, but not pure or leveraged plays into the sector. An ETF or two was available.

I was surprised at this. Given the duration of time the Crypto sector has existed, the types of technology involved and the fascinating narrative that Crypto / blockchain has created, I expected to see a larger range of available investments, as well as the usual assortment of dubious, low quality public entities that emerge in developing sectors. Kinda like what happened to the cannabis world over the past several years.

I viewed this as a positive sign that the Crypto train had not yet left the station. In fact, no one seemed at the station. Perhaps because of the gravity sucking distractions of COVID and Trump; Or the cannabis investing hangover many investors have; Or the focus on Tesla and Amazon and other Mega Techs. Or the sting of Bitcoins last 80% correction a couple years ago – The sector is / was surprisingly under represented in the public company sphere and the general investing public’s eye.

I started calling some pretty smart friends and acquaintances and asking them what they thought of the whole thing. Crickets. No one was paying attention, and if they heard anything about the sector it was very old news. Finding independent research on the Crypto sector is tough as well, and there is little if any analyst coverage of publicly traded companies. Fortunately, I did discover a series of white papers from Ark Investment Management > https://ark-invest.com/white-papers/.

So the hunt was on to find a way in!

I initially settled on taking positions in three publicly traded Crypto miners: HIVE, Bitfarms and Hut 8. They all passed the smell test, with varying degrees of success. The also passed the balance sheet screens, albeit with some concerns. My enthusiasm about the sector perhaps made me a little more flexible than I otherwise would have been.

All three are ‘Miners’. Owning, operating and building / acquiring server farms, using mined currency and financing to pay for the expansion of their operations.

I had them positioned as each being 20% of the DTM5. All three got off to great starts, giving me some early volatility to average into and then all three being sucked upward into the Tornado which is the Bitcoin price rise.

Along the way, I identified a couple other Crypto investments that I wanted to add to the DTM5 – to diversify a little away from pure Juniors and to remove some management risk from the Thesis. I also noticed that the three Jr. Crypto miners in the DTM5 were trading in a highly correlated fashion. So, I decided to consolidate the 3 down into one, while taking profits to allocate to other positions. The ‘One’ was HIVE. It made the cut as its mining operations are profitable, and there is transparency into how that profitability will continue to expand; Its balance sheet is the strongest of the 3; Its mining operations are diversified between Ethereum and Bitcoin; And it was the least ‘pumpy’ of the bunch. No Nonsense. Management seems laser focused, credible and cost conscious. Their execution has been strong.

Despite a recent pullback, HIVE has been a major contributor to the DTM5 strategy performance since inception.

The other Investments the DTM5 has in the Crypto space currently are Galaxy Digital Holdings https://www.galaxydigital.io/ and The Bitcoin Fund ETF issued by 3iQ https://3iq.ca/the-bitcoin-fund/

I’ll be writing about them in the future; The bitcoin fund is a direct play on the price of bitcoin; Galaxy digital is a Merchant Bank positioning itself in the center of the Cyrpto / Defi business ecosphere. Super interesting!

Below is a chart of the three current Crypto holdings of the DTM5 (currently 50% of the strategy) over the past six months

Ciao for now!