Insights: Going copper crazy while the DOGE master bites bitcoin

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May 15th, 2021

Gone are the days when the only thing that mattered was what a Fed official said in a speech. With the central bank likely on hold for the rest of the year, Jerome Powell and other central bankers are being overshadowed by thought celebrities and memes. We saw an example this week when Elon Musk stunned the Bitcoin community with news that Tesla (TSLA) would no longer be accepting BTC for payment until its network transitions to more sustainable energy. The news sent the cryptocurrency plunging.

Will Musk's bitcoin U-turn help drive further dogecoin adoption?

While the BTC rout initially dragged down the entire cryptocurrency complex, crypto investors started to scoop up less energy-intensive coins such as ADA, Polkadot, and Solana. In fact, all three have made all-time highs over the past three days. We will have to see how this shakeup impacts crypto-equities. So far, investors have sold the uncertainty. However, we expect that the selloff has provided buying opportunities for companies that are involved with projects that demonstrate signs of growing adoption.

The next challenge for Kash is user adoption

In particular, we will be watching our April 7th morning report stock (INTL) which is rolling out a beta financial product next month on the Terra blockchain, a network that is likely much less energy-intensive than Bitcoin. Meanwhile, the team at our April 14th morning report stock (BCFN) will need to convince investors of the energy efficiency case for the Syscoin blockchain via merge mining with bitcoin if the Musk clean energy narrative holds.

Indeed, the Musk move will force the bitcoin community to aggressively address the issues he has raised. On Saturday, Real Vision released a segment from a recent crypto conference where the panel made the case that bitcoin was increasing its use of renewable energy and helping to make new clean energy projects more viable. We expect to be hearing more about the greening of bitcoin in the weeks ahead. Whether it is enough to push it to new all-time highs this year remains to be seen.

Raoul Pal shared his theory on what could be partially driving the Tesla U-turn on bitcoin. In Friday's Daily Briefing, he mused that Elon Musk may now be working to align with dogecoin in order to solidify a connection with the user community of the meme coin which is currently one of the top 10 cryptocurrencies in circulation with a market cap of more than US$68 billion according to CoinGeckgo.

Musk has been the master of the DOGE, seemingly able to make the coin jump by broadcasting bullish tweets on Twitter. We will have to see what else he may have up his sleeve in the next few weeks. There is no standard measure of cryptocurrency energy efficiencies. One widely-quoted study concluded that dogecoin uses about 1% of the energy that bitcoin uses, while a carbon footprint analysis by Digiconoimst found that DOGE is about 6.8% as carbon-intense as bitcoin.

Copper mining stocks grabbed our attention this week as they fit nicely into two of our core investment themes in play. Copper stocks have emerged as a way to play core theme #2, "Improvisation and innovation, particularly in the areas of healthcare and managing carbon emissions reduction," as well theme #3, "Preparing for a monetary system change with exposure to cryptocurrency opportunities and commodities." So far this month, three copper stocks have headlined our morning report, and two others were top movers up the INK Edge rankings for the week ended May 15th.

The people's car is getting into EV gear

We are now in the middle of Real Vision's latest series, "Welcome to the Exponential Age," a two-week journey into Raoul Pal's investment thesis that we are about to enter, or have entered, a 10 to 20-year period of unprecedented, concentrated technological change across a variety of fields. Ed Harrison kicked off the series on Monday with an interview with Pal focusing on some of the actionable opportunities found in this investing theme. One of those opportunities he pointed to is the field of electric and self-driving vehicles where copper is expected to play a key supporting role. On Friday, Pal explored the future of EV with Volkswagen Group Innovation Executive Director Nikolai Ardey. It is a fascinating interview that should have the auto industry perma-bears rethinking their thesis.

On the mining front, we will continue to keep an eye out for junior copper plays which are, of course, only suitable for risk-takers. Even those with high risk tolerances should take a diversified approach as some junior miners will just not make it, no matter how high the prices of copper or other metals go.

Disclosure: One or more INK Employees holds INTL or BCFN.

bridge media | Nike Shoes

Top 3 Gainers Last Week

Company NameStock Symbol1 Week Return %
Canadian TireCTC.A5.5
Exco TechnologiesXTC4.4

Top 3 Losers Last Week

Company NameStock Symbol1 Week Return %
Enthusiast Gaming HoldingsEGLX-22.2
Turquoise Hill ResourcesTRQ-22.1

Returns are as of the last trading day of the previous week.

Featured Clip

Insider of the Week

Elon Musk (Image: JD Lasica)

The Tesla CEO is already known for his ability to move the share price of the car company and dogecoin with tweets. This month, he demonstrated his ability to shake the entire cryptocurrency market by focusing on the environmental issues surrounding Bitcoin. As for the motivation to drop BTC as a form of payment, some are suggesting it is to manage risk surrounding green subsidies for the carmaker. Whatever the case, he has put a spotlight on the environmental impact of bitcoin mining which is probably a good thing.

INK Canadian Insider Index

1 Year Total Return Performance

Historical Performance

Annualized Total Return as of May 14, 2021 04:49 pm
1 Year 93.41%
3 Years 9.03%
5 Years 11.00%
10 Years 8.90%

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5 Year Total Return Performance

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