GD Entertainment & Technology Inc. (OTCMKTS:GDET) is worth a close look right now. One strategy that has printed money for smart market participants over the past few years is an arbitraging play using bitcoin-related equities as a lagging catch-up trade following bursts higher in the cryptocurrency, with the best results being found in micro-cap plays that are off the radar at the start of the excitement.
The market gets around to all of them in time. But it takes a few days before the smallest plays are found and driven higher.
Right now, GDET stock could be a perfect candidate for this treatment. The company is a well-established, fast-growing diversified crypto play with mining, cold-storage, and ATM segments, as well as strong exposure to the CBD space through its The Greenery subsidiary, which has been showing promise of its own.
Possibly the company’s most well-developed and flashy crypto segment is its HyperDigital Technology subsidiary, which is genuinely a potential leadership play in the Bitcoin ATM craze. The company recently established its first live machine in a vape shop in Austin, TX, as a pilot play to be used to market to a series of other candidate locations to show its shareholders that the strategy is capable of generating strong margins worth leveraging, and to show prospective business managers that the presence of the machine on location can stoke a bump in store traffic and good vibes with crypto-sympathetic consumers.
So far, as we understand it, the pilot is progressing very well, and we anticipate news soon from the company pushing this theme forward and announcing potential expansion of the business, which should present some key quantitative traction for future financial performance estimates.
This is no small potatoes. The Crypto ATM market is expected to show dramatic growth over coming years as alternate and digital payment methods penetrate deeper into mainstream culture. As a case in point, a recent report from MarketsandMarkets notes that the crypto ATM market will reach $144.5 million by 2023 from $6.8 million in 2017, representing a CAGR of 54.7%.
In addition to the BTC ATM biz, the company also runs a major bitcoin mining farm in New Jersey that recently announced a move to dramatically expand operations following the signing of a material Asset Purchase Agreement for the acquisition of significant new and used Bitcoin mining assets to be immediately integrated into the company’s active cryptocurrency mining operations.
“We are expanding and optimizing production from our mining operation at a rapid pace,” commented Anil Adnani, CEO of GDET. “This planned expansion follows a series of steps in Q2 and Q3 to dramatically lower our all-in costs through improved negotiated rates with utility providers and significant firmware upgrades. Any notable increase in the price of Bitcoin following this expansion in production at our mining facility should translate into substantial top and bottom-line growth for our shareholders.”
The company is currently operating a number of ASIC Bitcoin Miners at its primary New Jersey mining facility, with plans in place to move toward full fleet operation over the near term. The new agreement added 17 new state-of-the-art miners to the company’s fleet, immediately increasing yield by 24%. The move is part of a larger expansion strategy geared toward augmenting shareholder value as the Company prepares for higher cryptocurrency exchange rates and wider mainstream adoption.
The Sound of Inevitability
As the Bitcoin space heats back up – and it looks promising right now as we see the Fed, BoJ, and ECB all engaged in QE/money printing simultaneously for the first time in history and the US set to run a $1 trillion deficit in 2020 also for the first time ever – the market will be ferreting out every related investable asset that stands to benefit from that price appreciation.
GDET shares fall squarely in that category as the company hums away churning out coins from its mining operations and begins to expand access to the crypto markets for underserved underbanked populations and folks wanting to turn cash into crypto and crypto into cash.
As we said, when BTC rips, the related stocks rip as well, but after a bit of a lag. That’s the historical pattern. At this point, BTC is up about 35% in a few weeks, and we would look for the equity plays in the small and micro-cap space to start responding this week and next week. The writing is on the wall, and GDET is a prime candidate for some pin action.