BRC-20 The New Gold Rush?

BRC-20 tokens have literally jumped on stage in the Crypto Universe. The main attention as a solution to Bitcoin’s programmability limitations by utilizing ordinal inscriptions. A form of a Non-fungible Tokens. These tokens enable the creation of semi-fungible tokens on the Bitcoin network. This article explores the concept of BRC-20 tokens functionality, and their potential as a token standard on Bitcoin. While it also highlights the potential stock winners from the increased mining fees.

How are BRC-20 Tokens Created?

The creation of BRC-20 tokens stemmed from the launch of the Bitcoin Ordinals protocol in January 2023, which facilitated the inscription of non-fungible tokens (NFTs) on satoshis (sats). Following this development, there arose a curiosity regarding the possibility of creating fungible tokens on the Bitcoin network. In response to this, a programmer named Domo, who chose to remain anonymous, introduced the BRC-20 token standards in March 2023, enabling the minting of fungible tokens on Bitcoin.

The first BRC-20 token to be deployed was named “ordi,” and Bitcoin wallets swiftly adopted the necessary tools to support BRC-20 tokens. In the months that followed, numerous other BRC-20 tokens were launched, with many taking the form of meme tokens. Some of these tokens experienced significant market cap growth and witnessed astronomical price increases by May 2023. However, the heightened demand for BRC-20 tokens led to a surge in Bitcoin transaction fees and congestion on the Bitcoin network.

How doe’s BRC-20 Tokens Work?

To comprehend the functioning of BRC-20 tokens, it is important to understand the underlying Bitcoin Ordinals system. The Ordinals protocol provides a mechanism for numbering satoshis and allows users to attach additional data to them through a process known as “inscription.” BRC-20 tokens leverage Ordinals inscriptions using JSON (JavaScript Object Notation) data to deploy token contracts, mint new tokens, and facilitate token transfers. Currently, the BRC-20 token standard supports functions such as deploying a BRC-20 token with the deploy function, minting a specific amount of BRC-20 tokens using the mint function, and transferring a designated quantity of BRC-20 tokens through the transfer function.

It is worth noting that the BRC-20 token standard is relatively new, and the process of deploying, minting, and transferring these tokens may not be user-friendly at present. Additionally, the availability of tooling and supporting services for BRC-20 tokens remains limited.

Who’s the competition?

When comparing BRC-20 tokens to other popular token standards like ERC20 and ERC721, the key distinction lies in their fungibility. ERC20 tokens are interchangeable and represent a single entity, while ERC721 tokens are non-fungible and represent collections of unique assets.

It’s important to note that these token standards operate on different underlying networks. ERC20 tokens are built on the Ethereum blockchain, BEP20 tokens operate on the Binance Smart Chain (BSC), and TRC20 tokens are developed for the TRON blockchain and BRC-20 tokens are built on the Bitcoin network.

Another differentiating factor is the address style used by these tokens. ERC20 tokens are identified by Ethereum addresses starting with “0x” (e.g., 0xbd7e…), while TRC20 tokens utilize Tron addresses that typically start with “T” (e.g., T…).

BRC-20 tokens offer a unique approach to address Bitcoin’s programmability limitations, allowing for the creation of semi-fungible tokens through ordinal inscriptions. The exploration of their functionality and evaluation of their suitability as a token standard on the Bitcoin blockchain can provide valuable insights into their role in the evolving token ecosystem.

Who’s the main benefactor?

Last week, the demand for Bitcoin blockspace experienced a significant surge due to the emergence of BRC-20 tokens. These tokens, issued through text file inscriptions, drove up miner fee revenue, surpassing the 6.25 BTC block subsidy for the fifth time. This sudden increase in demand had notable effects on Bitcoin’s on-chain activity, inscription types, and miner revenues.

The surge in demand for BRC-20 tokens resulted in a record-breaking number of transactions on the Bitcoin network. Daily transaction counts reached an all-time high of 682,000, surpassing the previous peak from the 2017 bull market by 39%. The average number of transactions per block doubled, facilitated by the 75% discount applied to witness data for BRC-20 inscriptions. Interestingly, despite the transaction activity surge, the number of active addresses decreased, suggesting users’ preference for reusing Bitcoin addresses, possibly due to familiarity with account-based chains like Ethereum or Solana.

The rise of BRC-20 tokens led to a shift from image-based to text-based inscriptions. Text inscriptions, with their small data footprint, allowed miners to fill blocks with a record number of transactions. Text-based inscriptions accounted for over 50% of the total confirmed transactions, surpassing the dominance of image inscriptions seen in the initial wave. The total number of text inscriptions on the Bitcoin blockchain surpassed images by five million, totaling 5.69 million text files or 89% of all inscriptions.

The surge in demand for blockspace created extraordinary fee pressure. The average fee paid per block surpassed the block subsidy for the fifth time in history, reaching 6.66 BTC per block and a total reward of 12.9 BTC. Text files contributed significantly to the fees paid, ranging from 30% to 60% of the total, surpassing the dominance of image inscriptions in the previous wave.

Summary of leading Crypto Mining Stocks

1. Riot Platfroms (Nasdaq: RIOT) Market cap: US$1.735 billion

Riot Platforms, a distinguished player in the cryptocurrency industry, stands out as one of the few cryptocurrency-mining stocks publicly traded on the NASDAQ. Apart from its core activity of mining Bitcoin, the company boasts several subsidiaries engaged in various facets of the business, including one dedicated to hosting Bitcoin-mining equipment for clients.

Demonstrating consistent growth, Riot Platforms achieved remarkable results in March 2023. The company successfully produced 695 Bitcoin during this period, marking an impressive increase of approximately 36 percent compared to March 2022. As of the end of March 2023, Riot Platforms proudly held a substantial Bitcoin portfolio, totaling approximately 7,072 Bitcoin, all generated through its self-mining operations.

Riot Platforms’ strategic positioning in the cryptocurrency-mining sector and its robust self-mining capabilities have solidified its presence in the market. The company’s commitment to innovation, efficiency, and customer service allows it to thrive in the dynamic landscape of cryptocurrency. With its impressive track record and dedication to excellence, Riot Platforms continues to play a significant role in shaping the future of the cryptocurrency industry.

Technical Perspective

  • Riot is entering Wave 3 of a Primary
  • Our first target is $21.47 +/- a variance followed by a back-test equal to about a 50% retrace.
  • This count does not adequately represent a 10% increase in revenue from minting BRC-20 tokens.
  • A moon shot perspective assuming Bitcoin reaches $500,000.00.

2. Marathon Digital Holdings (Nasdaq: MARA)Market cap: US$1.487 billion

Marathon Digital Holdings, a pioneering cryptocurrency-mining company, made history as one of the early participants in trading on the NASDAQ. The company is dedicated to constructing the largest and most cost-effective mining operation in North America, solidifying its position in the digital assets industry.

In March 2023, Marathon achieved a significant milestone with a remarkable 21 percent month-over-month increase in Bitcoin production, resulting in a record output of 825 Bitcoin. This outstanding achievement contributed to the company’s record-breaking first-quarter performance, generating a total of 2,195 Bitcoin. The remarkable growth in Bitcoin production was complemented by a substantial increase in Marathon’s hash rate, which surged by 64 percent during Q1. By the end of the quarter, the company’s hash rate reached an impressive 11.5 exahashes per second.

Marathon Digital Holdings’ commitment to pushing boundaries and maximizing efficiency has positioned it as a leading force in the cryptocurrency-mining sector. The company’s dedication to innovation and its unwavering pursuit of success have allowed it to achieve significant milestones in Bitcoin production and hash rate expansion. With its resolute focus on building a robust and cost-effective mining operation, Marathon is poised to continue its upward trajectory in the ever-evolving world of cryptocurrency.

Technically Speaking

Weekly Look

  • This is a brutal look! MARA has been a great proxy for Bitcoin. However, utility costs have been brutal to the P&L in the Crypto Winter.
  • Marathon is in a Wave 2 of a Cycle 5 Wave down ending as a micro penny stock.
  • The count could change with a breakout of the 200 day.
  • In the mean time, a longs STOP is $5.13. The prior low!

Monthly Look

  • Nice head and shoulder look to the bullish side.
  • Its has a completed bullish two drive that looks exhausted.
  • We will not likely confirm on RSI with this leg.
  • If the head and shoulder pattern manifests were looking at a $225.00 stock price +/- variance.

3. Cipher Mining (Nasdaq GS: CIFR) Market cap: US$517.143 million

Cipher Mining is a prominent player in the Bitcoin-mining industry, operating a vast ecosystem of industrial-scale data centers dedicated to Bitcoin mining services. With a global reach, Cipher Mining offers its mining services to customers around the world, providing them with reliable access to Bitcoin mining capabilities.

As of early April 2023, Cipher Mining proudly boasts a total self-mining capacity of 5.7 exahashes per second across all of its sites. This significant capacity demonstrates the company’s commitment to maintaining a robust infrastructure to support its mining operations.

In March 2023, Cipher Mining achieved remarkable results, producing approximately 413 Bitcoin. This marked a notable 4 percent increase in production compared to the previous month, highlighting the company’s consistent growth and mining capabilities.

Cipher Mining’s dedication to maintaining cutting-edge infrastructure and delivering reliable mining services positions the company as a key player in the Bitcoin-mining ecosystem. Through its expertise and commitment to excellence, Cipher Mining continues to make significant contributions to the industry while ensuring customer satisfaction and driving innovation in the ever-evolving world of Bitcoin mining.

Technical Perspective

Weekly View

  • CIFR is in entering a Primary Wave 4 in bearish leading diagonal destined to be a penny stock.
  • However, I believe the count would flip with a bitcoin over $40,000.00. Because even a unprofitable miner becomes profitable then.

Monthly View

  • Not enough history to really look at it. But, since we were showing the monthly on other symbols we wanted to be consistent.

4. Hut 8 Mining (TSX: HUT) Market cap: C$508.372 million

Hut 8 Mining, a leading cryptocurrency mining company specializing in Bitcoin and Ethereum, has established itself as a key player in the industry. With a robust infrastructure comprising over 121 megawatts of power capacity, three digital asset data-mining facilities, and five multi-tier data centers for high-performance computing, Hut 8 has positioned itself as a reliable partner for more than 400 commercial high-performance computing customers.

As of February, Hut 8 proudly held 6,115 self-mined Bitcoin in its revenue stock. This significant accumulation reflects the company’s commitment to mining operations and its ability to generate substantial Bitcoin holdings.

In 2022, Hut 8 achieved remarkable growth by mining 3,568 Bitcoin, marking a 28.1 percent increase compared to the previous year. This achievement can be attributed to the expansion of Hut 8’s miner fleet and the intensified mining activities undertaken by the company. As a result, Hut 8’s Bitcoin holdings reached an impressive total of 9,086 by the end of 2022, with a market value amounting to US$203.6 million.

Hut 8’s consistent mining performance and its strategic approach to the cryptocurrency market have solidified its position as a trusted industry leader. The company remains dedicated to advancing its mining operations, optimizing its infrastructure, and expanding its cryptocurrency holdings in the future.

Technical Perspective

Weekly View

  • HUT is in a bearish Primary Wave 5
  • The count it become a penny stock.
  • However, just like CIFR at a $40,000.00 Bitcoin I believe that changes.

Monthly View

  • Same thesis as the weekly!

5. Hive Blockchain Technologies Ltd (Nasdaq: HIVE) Market cap: C$362.827 million

HIVE Blockchain Technologies Ltd., a publicly listed company on the TSX.V, is at the forefront of bridging the blockchain sector with traditional capital markets. With a growth-oriented approach, HIVE has established itself as a key player in the industry.

HIVE owns cutting-edge data center facilities powered by green energy sources in Canada, Sweden, and Iceland. These state-of-the-art facilities enable the continuous production of newly minted digital currencies, including Bitcoin and Ethereum, through cloud-based mining operations. By leveraging these deployments, HIVE provides its shareholders with exposure to the lucrative operating margins of digital currency mining, as well as a diverse portfolio of crypto-coins.

With its strategic positioning and commitment to sustainability, HIVE Blockchain Technologies offers investors a unique opportunity to participate in the growing world of digital currencies while maintaining a focus on environmental responsibility. Through its innovative approach and state-of-the-art infrastructure, HIVE is well-positioned to drive continued success in the blockchain sector.

Technical Perspective

Weekly Look

  • We are in a ABC corrective pattern whereby Wave C is extended as noted by Target 1.
  • Its important to note that this is a projection based on prior wave degrees and may or may not manifest.
  • All considered, I’m highly confident well get at least retrace off the Primary Wave Set-up to around 50% back of Wave C at some point.

Monthly Look

  • Assuming Wave I of the Super Cycle Wave is a 23.6% Fibonacci extension, you can see where HIVE could land assuming a $500K bitcoin valuation.
  • Again, many assumptions have been make and its prudent you you sound principals in your investment scheme.

6. Bitfarms Ltd. (Nasdaq:BITF) Market cap: C$316.122 million

Bitfarms, a prominent blockchain infrastructure company, stands as one of the largest cryptocurrency-mining operators in North America. With a focus on sustainable operations, Bitfarms operates five hydroelectric-powered facilities in Quebec, Canada, where it leverages computing power to mine various cryptocurrencies, including Bitcoin. Through its mining activities, Bitfarms earns fees from cryptocurrency networks for their crucial role in securing and processing transactions.

In 2022 alone, Bitfarms successfully mined 5,167 Bitcoin, highlighting its proficiency in the field. Furthermore, as of mid-February 2023, the company achieved a significant milestone, surpassing the remarkable benchmark of 20,000 Bitcoin mined since its inception in 2017. Demonstrating consistent growth, Bitfarms recorded a notable 17 percent year-over-year increase in Bitcoin production in March 2023.

Bitfarms’ commitment to sustainable operations and its impressive mining capabilities have positioned it as a key player in the cryptocurrency industry. The company’s continued success in mining operations reinforces its role in the ever-evolving digital landscape, driving innovation and contributing to the secure and efficient functioning of cryptocurrency networks.

Technical Perspective

Weekly View

  • BITF is a bullish ABC pattern just putting in a base.
  • This is an excellent spot to start building a position.
  • First target is about 50% back about $3.87 +/- a variance.

Monthly View

  • Same thesis as the weekly.

In conclusion, BRC Millionaires are being minted here, the main benefactors is hash rate and the Miner’s who mine these NFT’s. Miners benefited greatly from increased fees, experiencing a boost in revenue. The total fees paid to miners amounted to 1,262 BTC this week vs last weeks revenue of 1,090 BTC representing at 13.6% increase. Only time will tell exactly how BRC tokens will affect the blockchain, but for now maybe we should be looking at miners! That said, out of the six compaies reviewed based on technical market cap we came up with three companies who are technical close for an entry. Riot Platfroms (Nasdaq: RIOT), Hive Blockchain Technologies Ltd (Nasdaq: HIVE) and Bitfarms Ltd. (Nasdaq:BITF)

As always, Great Trading!

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