It All Comes Down to Gains: Cryptos

Recorded: 8/18/17

Aaron Gentzler, Publisher, Technology Profits Confidential: Hello, and welcome. I’m Aaron Gentzler, publisher. On the phone with me today is lead editor and analyst Ray Blanco.

Hi, Ray. How’re you doing today?

Ray Blanco, Editor, Technology Profits Confidential: Great, Aaron. How are you doing?

Gentzler: I’m great.

This month I’d like to kick it off by getting your take, big picture, on the cryptocurrency space. It’s explosive and it’s gathering investor interest like few topics have in recent years. From your standpoint as a tech expert, what’s the average everyday investor to do to take part in the crypto craze?

Blanco: There are a lot of ways to do that. You could buy the coins, if that’s what interests you. On the other hand, you could invest in companies that are peripherally involved in some way.

Gentzler: In your opinion as a tech expert, how do you tell the difference between a mania that’s going to work out great and a mania that’s going to end up like the Tulip Mania, where everyone gets hurt in the end?

Blanco: What am I buying when I buy a cryptocurrency? What do I actually own? I know if I buy shares in a major chip company, which I think are great pick-and-shovel plays in crypto, I actually own something. If I buy the latest coin, what do I actually own? What’s backing the value of it?

Gentzler: This is an important distinction because last week, the CEO of a major chip producer gave an interview to CNBC where he said that the crypto space is becoming a very important line of business. How is that applicable to the cryptocurrency craze right now?

Blanco: Chipmakers, as one report has it, are leasing 747s to fly planes full of chips out of Taiwan, where a lot of semiconductor manufacturing occurs. Groups are buying these chips in droves to set up warehouses that house supercomputers for the sole purpose of “mining” crypto.

Because many of these cryptocurrencies have some sort of a work component, you have to process transactions or update ledgers to earn these coins.

It’s all very computationally intensive, and if you want to go ahead and mine for new units of ethereum or bitcoin, you need to have processing power. That’s where these chipmakers come in, and it’s a whole new revenue stream for them.

Gentzler: Right.

Blanco: You have a CEO of a major chipmaker telling us this is a really important part of their business now. Why? Because they’re not just selling chips to gamers anymore. They have a new line of business, and it’s called crypto. And they’re making bank on it right now.

I think we may see a long-term market for GPUs and other high-powered chips. How long the mania lasts remains to be seen. It could taper off very quickly.

Gentzler: Thanks, Ray. We’ll leave that there for now. And just to reiterate, you’re neutral to maybe slightly bearish on cryptocurrencies… But that’s subject to change in the months ahead?

Blanco: That’s a good summation for me. But just to reiterate… if you want to make a fast safe play on crypto, ask yourself… what will drive next level computing power? That’s the play you should make to catch some great gains with minimal risk.

Gentzler: Great, sounds like a good place to leave things for now. Ray, thank you so much for your time today.

Blanco: Talk to you soon. It’s been great.

Gentzler: Thanks for joining us today, folks, and remember, if you ever have any questions for Ray, you can write to him at askray@agorafinancial.com.

For Tomorrow’s Trends Today,

Aaron Gentzler
for The Daily Reckoning

The Daily Reckoning