Cycle Hype at Its Finest

Comic courtesy Hedgeye

The cryptocurrency boom is approaching editorial cartoon levels of absurdity, and it deserves it. The investing public is watching the social media posts of average people like them taking their kids to Disneyworld on some bitcoin that they bought on a lark with plenty left over, and they don’t see why they should have to miss out on free money. Mix that fear with a knowledge gap and an access problem, and we’ve got a million stocks without a pulse happy to hitch up to a working hype machine to move paper.

Long Island Iced Tea Corp. changed their name to Long Island Blockchain Corp. back in December and rode a 200%+ bump in share price. They printed a batch of buzzword soup about transformational technology at the time, and are still light on details about what they’re actually going to do.

Kodak made the news and came back from the dead last week after delighting the market with an announcement that they would develop a chain that keeps track of digital media rights. This, at least, is an articulated and plausible product. No word yet from Kodak, $257M larger in market cap terms since the announcement, on how exactly they’re going to pull it off.

Vancouver-based Calyx Ventures sees opportunity in the sound and fury surrounding the crypto space beyond putting out a press release that says “Blockchain!” and cashing in on the dotcom bubble of the late 2010s.

There is Opportunity In a Greed Pandemic

Calyx (CYX.V) was already in the enterprise software business when everyone and their babysitter started asking us about blockchain. The company told me that their original interest was in developing systems that serviced the marijuana industry, both by making a market and facilitating transactions. They bought some IP in November of 2016 and started developing it, finding quickly that their concept could be scaled to other industries. They made some more acquisitions and started an ongoing process of developing a suite of applications to service various different kinds of agricultural and other types of markets. Conceivably, Calyx was building software capable of disrupting grain cartels and giving smaller producers the ability to play with Agrex and Canopy… when crypto blew up and gave them a different look at it.

The blockchain technology that underpins cyptocurrencies can theoretically be used to keep track of any kind of system with changing states. It can also be used to verify transactions and handle escrow. Observers are betting on blockchain being the way those market components are handled moving forward, and Calyx agrees. They immediately tacked to make blockchain cores part of the market technology that they were developing, and set about equipping themselves for it.

Gearing Up

Over in Kamloops, Calyx opened up a blockchain mining facility full of GPU based mining rigs capable of mining multiple different kinds of currencies that run on multiple different kinds of chains. They don’t run ASCI bitcoin miners, partly because bitcoin mining pools are crowded, but mostly because bitcoin-specific rigs don’t afford them the flexibility to mine different chains. This is a fluid market, and mining cryptocurrency isn’t the only thing they’re up to.

The company announced yesterday that their initial foray into crypto mining paid out $50,000 US in the first month. They added rigs to their Kamloops operation last month, and said that they are planning on adding 100 rigs to a soon-to-open facility in in Vancouver, and that makes perfect sense. Effectively, cash-positive crypto operations pay for their own development. A company interested in mining facilities ought to scale them at the rate that they’re able in this environment. In Calyx’ case, the rigs may end up being assets that are worth more than the projected earnings value of the coins they pump out.

This is Only A Coin Mining Company Right Now

Statista says that $326B was spent on enterprise software in the US in 2016

Calyx’s self-propagating crypto farm isn’t its most valuable asset, its developers are. A well-established dev team turns those miners into testing apparatus for both their internal projects like the scalable agricultural market and for third party blockchain apps that that they can build on contract. Everybody and their dog is contemplating the next great blockchain app, then launching an ICO to fund it. Meanwhile, big companies are looking to use blockchain to modernize their systems and operations. Insurance companies could use it to track policies and claims. Vegas could use it to facilitate sports betting markets. Shipping companies could use it to keep track of every container in the world – even the ones floating in the drink. Those products don’t only have to be developed, they have to be rolled out. A company with a network of miners will theoretically be able to get through the development and launching process a lot quicker than one without. They will have the inside track on the fees available to the mining of new private utility chains that track shipping containers or intellectual property rights or pure bred dogs.

Calyx is still being tight lipped about exactly what they’re cooking and how. But they surely want the market to know that they’re in crypto for real, have the rigs to prove it, are adding to those rigs through what appears to be a cash-positive method, and believe in the future of blockchain in a very real kind of way.

Full Disclosure:  Calyx is an Equity Guru marketing client, we also own shares in the company.

Pursuant to a resolution passed by the directors dated Nov. 27, 2017, Calyx Bio-Ventures Inc. changed its name to Calyx Ventures Inc. effective as at Feb. 5, 2018. The ticker symbol CYX is unchanged.

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“Calyx is still being tight lipped about exactly what they’re cooking and how. But they surely want the market to know that they’re in crypto for real, have the rigs to prove it, are adding to those rigs through what appears to be a cash-positive method, and believe in the future of blockchain in a very real kind of way.”

7 months later and still nadda, zip, zilch. Now I think it makes sense to hold off on news until the Fall since the Summer doldrums are in full effect but I think Roger takes “tight lipped” to a whole new level? Time for CYX to hire a PR firm and get the story out… heck anything out.