How to keep the King as an American!

AmericanKingFlagThe news that Burger King is planning on purchasing Tim Hortons of Canada to take advantage of the lower 15 percent Canadian tax rate should not surprise anyone. Free enterprise means that companies seek to do business in locations where the most profit can be kept. There’s nothing wrong with this perspective. Tax inversion is simply a variation on supply and demand. Economies are in demand that provide for low taxation.

I am not rigidly Darwinian in my viewpoint regarding capitalism; I do believe companies have a corporate responsibility to pay their fair tax share, particularly when they enjoy the benefits of what many believe to be the strongest economy in the world, the United States. Sure, they need to pay up, but there needs to be more progressive thinking about taxation of corporate revenues or we are going to read about tax inversions every week.

Perhaps what should be put in place is a quid pro quo perspective on job creation and taxation. This would be no different than the tax benefits given to companies that invest in capital expenditures. Create jobs and you get tax credits. Incentivize companies and they will come to the table.

Jobs to China? Maybe not if it pays to keep jobs here. Burger King to Canada? Maybe not if they hire more people here in the United States.

Here’s a thought on how this might work: Let’s say a corporation agrees to hire 1,000 employees. Those employees would create tax revenue for the federal government as well as tax deductions for the employing corporation. Instead of the government trying to receive a net increase in tax revenue, couldn’t the government give a credit back for the taxes paid by the hired employees? The net result would be a wash for the government but the overall economy would expand.

An expanding economy would mean more money circulates in the economic system. Given that the U.S. economy is 70-percent consumption, that should help move the U.S. economy forward and a virtuous economic cycle would create further economic growth. In the end, the government benefits because of increased taxation from sales. Increased economic growth means more Americans are employed and companies are not tempted to buy companies in Canada.

This tax plan would not be protectionist but instead positively encourage companies to do their part in spurring economic growth.

The United States economy is already managed enough as it is. With an interventionist Federal Reserve and a government insisting on massive regulations, free enterprise is already on ropes. This might be highly wishful thinking, but let’s not penalize companies for being creative in seeking higher profits. Let’s instead incentivize them to keep capital in the United States and a hire workers.

New York’s Proposed Rules on Bitcoin is Dividing its Base

bitcoin and Edward Tj GeretyA new battle has opened in the battle over Bitcoin.

Since New York became the first state to propose virtual currency regulations two weeks ago, Bitcoin enthusiasts have had a mixed reaction on whether the new rules will help legitimize the virtual currency or whether they will thwart innovation and threaten the very freedom that Bitcoin was meant to promote. The draft legislation has also exposed a division among virtual currency companies with enough resources to comply with the regulations and those without.

On Tuesday, some Bitcoin supporters are planning to send an open letter to Benjamin M. Lawsky, New York State’s top financial regulator, requesting more time to comment on his proposed legislation.

“Many of us are individuals or small start-ups operating on limited budgets without access to extensive legal resources,” the letter states. “This imposes a substantial burden as we seek to understand the proposed rules and their current and future impacts on our businesses, open-source projects and educational research.” The letter also refers to “inconsistent statements” and opaque language in the draft regulations.

The letter, which has about 400 signatures, including many big names in the virtual currency industry, says the 45 days allotted for comments is not enough time for interested parties to provide adequate feedback on “both the broad scope and detailed components of the proposed rules.” The letter requests 45 additional days.

“We really want to make this a collaborative and engaging process with regulators,” said Austin Walne, who wrote the letter. “We want to have a dialogue, and we want more time to have it.”

A self-described technologist and Bitcoin enthusiast, Mr. Walne teamed up last week with Elizabeth Stark, an entrepreneur, to gauge reaction to the letter. The response, they said, was overwhelming. Hundreds of people, including executives from Bitcoin companies backed by venture capital, as well as students and users of Reddit, signed the letter. Among those who have added their signatures are Barry Silbert of SecondMarket, who runs a Bitcoin investment fund, and executives from the Bitcoin company BitPay.

When it was introduced in 2009 by a programmer, or group of programmers, Bitcoin appealed to anti-establishment enthusiasts and technology buffs who operated on the fringes of the financial system. Now, as virtual currency becomes more accepted in the mainstream, start-ups could find themselves unable to comply with regulations that seem to favor more established financial companies.

“If only companies that have already raised tens of millions of dollars in funding can succeed, we can say goodbye to the Bitcoin start-up ecosystem,” Ms. Stark wrote in an opinion article on TechCrunch last week. “In effect, New York’s proposed regulations will throw the baby out with the bathwater.”

The regulations, introduced by Mr. Lawsky’s office, the Department of Financial Services, are intended for virtual currency companies operating in New York and include rules on consumer protection, the prevention of money laundering and cybersecurity. A “BitLicense” would be required for Bitcoin exchanges and for companies that secure, store or maintain custody or control of the virtual currency on behalf of customers. Merchants that accept Bitcoin for payment, like Overstock.com, would not need to apply for a license.

Mr. Lawsky said the rules, the product of a nearly yearlong review, are intended to inspire consumer confidence and promote commerce by encouraging more companies to come to New York.

Still, virtual currency start-ups have taken issue with the extent of the regulations, some of which are stricter than existing rules for traditional financial institutions. Opponents of the rules have argued that start-ups simply don’t have the resources to comply with certain licensing requirements, including onerous reporting rules, hefty capital requirements and robust cybersecurity programs.

“I think most people were surprised that it is such a broad, sweeping regulation,” said Jim Harper, global policy counsel at the Bitcoin Foundation. “It seems meant to create an entirely new regulatory regime for Bitcoin.”

The public currently has 45 days from July 23 to comment on the proposal, after which Mr. Lawsky’s office intends to make changes to the rules and send them back out for review for another 30 days. So far, Mr. Lawsky said, his office has received “thousands of comments” on the proposed regulations.

Though there has been vocal opposition to the rules, there is also a significant camp that considers the rules an important step to bringing Bitcoin and other computer-based currencies into the mainstream.

“This is a very good thing for Bitcoin,” Gil Luria, an analyst at Wedbush Securities, said when the regulations were introduced. “It may end up being one of the most important milestones in the development of Bitcoin.”

Mr. Lawsky said on Tuesday that he was willing to address concerns that the regulations as they stand would squeeze smaller companies. He said he would also consider extending the comment period.

“This is certainly a unique situation where we’re trying to regulate in an evolving, high-tech, innovative environment, and we want to make sure we get it right,” Mr. Lawsky said. “We will certainly think through very carefully the very obvious comment that, when it’s a small start-up, they’re going to have less resources in terms of compliance.”

Why I keep buying ACI

Few sectors have been more hated over the past few years than coal. Coal companies have come under pressure for a number of reasons, including slowing growth in China, low natural gas prices, and opposition from the Obama administration. As shown by the chart below, Arch Coal (ACI) has not been the only coal stock to suffer over the past few years. However, at this point, I believe ACI is an interesting speculative investment idea, and I recently bought back into the stock.

Edward Tj Gerety and ACI

ACI data by CNBC

No Debt Maturities Until 2018

One of the main reasons why I feel comfortable taking a chance with ACI is that the company does not have any debt due until 2018. ACI also has more than $1 billion in cash. In December 2013, the company made a smart move by completing a tender offer for its $600 million worth of senior notes due in 2016 along with issuing $350 million worth of senior secured notes due in 2019. The fact that ACI does not have any debt maturities until 2018 means that the company has a time window for coal prices to improve.

Coal Prices Could Improve

Prices for both metallurgical coal, used for steelmaking, and thermal coal, used for power generation, have been under significant pricing pressure due to a number of factors. ACI is a major producer, and holds significant reserves, of both metallurgical and thermal coal. At the moment, the metallurgical coal business appears to be more troubled than the thermal coal business. However, both metallurgical and thermal coal prices are low for the same basic reason: supply is currently greater than demand. Of late, thermal coal prices have been helped somewhat by rising natural gas prices. Moody’s has said that most of U.S. metallurgical coal production including mines operated by Peabody Energy (BTU) and Walter Energy (WLT) is unprofitable and as much as half of global output is unprofitable at current prices. In my view, the current price is unsustainable. Cliffs Natural Resources (CLF), a major producer of iron ore and metallurgical coal, recently announced that it plans to idle its Pinnacle Mining Complex which produced 2.8 million tons of metallurgical coal in 2013. Other leading miners have also said announced plans to idle mines or are considering idling mines due to current market prices. In addition to a reduction in supply due to mine idling, coal prices could also benefit from a stronger global economy which could lead to a rapid increase in power generation. Another potential catalyst for thermal coal is a more favorable Presidential administration, towards coal, in 2016. SA contributor Equity Watch laid out the more in depth bull case for coal in a recent piece and I tend to agree.

Hedge Funds Buying Arch Coal

Citadel Advisors, the massive hedge fund run by Ken Griffin, recentlyincreased its stake in ACI to more than 5.4%. Another noted hedge fund manager, Jim Chanos, also recently purchased a stake in ACI. Chanos’ move is interesting because he has an extremely negative outlook on the coal industry. Chanos is said to be short all of the major U.S. coal producers with the exception of ACI. While investors should never make decisions based on the holdings of high profile investors, I believe the fact that these two noted investors are long ACI is a positive.

Conclusion

Coal is arguably the most hated market sector right now. However, some recent examples of hated sectors that have turned to market darlings include airlines, solar, and financials. I think it is likely that coal prices are nearing a bottom and prices could move much higher over the next few years. Due to its lack of debt maturities until 2018 and hedge fund ownership, I believe ACI is an attractive way to speculate on a bottom for coal.

Disclosure: I have maintained positions on and off since 2010 in ACI and currently have added it to my portfolio and plan to remain bullish and increase my holdings.

Life after Bitcoin?

Edward GeretyWhile Bitcoin grabs headlines, a little-noted rival promises to supercharge all currencies old and new, fiat and cyber. An open-source programming system called the Ripple protocol could transform commerce and banking by making dollars, yen, euros, bitcoins, and even loyalty points virtually interchangeable.

The Ripple protocol, based in part on the system behind Bitcoin, is a payment and currency exchange system that erases the barriers between fiat currencies while also embracing digital currencies and other representations of value, ranging from gold to frequent flyer miles. It goes beyond Bitcoin by providing a code system that leaves no currency—including bitcoins—out.

Right now anyone can make limited use of the Ripple system by signing up with financial gateways such as SnapSwap and Bitstamp for quick cross-currency exchanges between dollars, euros, bitcoin, and more. The greatest value for most people will come if banks and other institutions implement the protocol to streamline their operations. Then all sorts of transactions would become simpler, quicker, and more secure. Many people would not even know Ripple was involved; they’d simply notice that their banks got better.

The system is being developed as open-source code by Ripple Labs, a Silicon Valley startup backed by Google Ventures, Andreessen Horowitz, and other leading funders. Like TCP/IP, the protocol that powers the World Wide Web, the Ripple protocol enables developers to create cheaper, speedier and more secure ways to perform transactions that are more laboriously executed by existing technology based on fiat currencies and pre-internet methods.

The key to Ripple is its distributed, decentralized nature. “It offers a way to confirm financial transactions without requiring a central operator,” says Chris Larsen, Ripple’s CEO. That saves both money and up to days’ worth of time. While the Bitcoin system also bypasses a central operator, its transactions take minutes rather than seconds to process, according to Larsen.

Financial organizations have already begun adopting the Ripple protocol. In May 2014, Germany’s Fidor Bank became the first bank to use the Ripple protocol. Its customers can now send money in any currency instantly and at a cost lower than typical bank rates through Fidor’s money transfer products.

Some larger financial institutions have also taken baby steps to help their customers learn about or participate in Ripple. For example, Bank of America (BAC) and Wells Fargo (WFC) offer easy ways for customers to send money to SnapSwap, the Ripple gateway that lets people buy digital currencies and performs exchanges in more than a dozen fiat currencies including the dollar, euro and pound. Such initiatives, now in their infancy, may pave the way for more active participation by major institutions.

Meanwhile, eleven financial gateways are now implementing the Ripple technology to facilitate transactions within the network. They are SnapSwap, Bitstamp, rippleCN, The Rock Trading, RippleChina, Justcoin, rippleSingapore, btc2ripple, Coinex, Bitso, and Ripple LatAm.

The latest gateway, Ripple LatAm, was launched on June 12 by AstroPay. The United Kingdom-based regional service, which covers Brazil, Chile, Colombia, Mexico, Argentina and Uruguay, will connect Latin American businesses with their counterparts in Asia, Europe and North America for faster and more affordable remittances, merchant payments and other transactions.

The longer-term prospects for leveraging Ripple are enormous. Perhaps the biggest first step any large financial organization could take would be to use it to offer faster, cheaper currency exchange services. According to the Bank for International Settlements, the global foreign exchange volume reached $5.3 trillion a day in 2013. This growing market is ripe for the taking.

The window of opportunity is open wide, but it could start to narrow. Already a London start-up, TransferWise, has raised $25 million to implement a peer-to-peer technology enabling people around the world to swap currencies at much lower rates than current bank transfer fees.

Beyond currency exchange, banks might also use Ripple to develop next-generation payment vehicles to replace obsolescent credit cards or to expand into cloud storage by offering virtual safety deposit boxes. Banks could also use Ripple to create innovative new smartphone apps and forge alliances with tech-savvy organizations that live by transactions, such as Walmart and IBM.  Such developments could facilitate a renaissance in community growth by greasing the wheels of services such as microloans, helping to create jobs. And if Ripple becomes widely adopted, the result could be a whole new medium of exchange—“money 2.0” or “supermoney.”

Traveling with just Bitcoin isn’t possible just yet but …

bitcoin-travel-spend-bitcoins

We haven’t yet reached the point where you can seamlessly book an entire vacation using Bitcoin, but it is getting easier and easier for consumers to use the virtual currency to pay for various bits and pieces of their travel and even to keep track of their rewards points.

Last month the online travel agency CheapAir.com started accepting bitcoins to make reservations at more than 200,000 hotels around the world. Shortly afterward, CheapAir announced that their customers could also book their Amtrak train travel using Bitcoins.

For luxury hotels, back-end revenue management engine Revpar Guru has built anentire booking widget around Bitcoin in preparation of its adoption by globetrotters. Their tech platform not only allows for hotel payments at locations like D Casino Hotel and Golden Gate Hotel & Casino, but it allows international customers to deposit bitcoins into accounts that can be used for sundry items so that they never need to exchange currency.

“Bitcoin is very attractive to merchants of all kinds because it is cheaper and faster,” said Jerry Brito, Senior Research Fellow, George Mason University

The rewards site PointsHound, which aggregates your points and miles when you book travel, is now offering Bitcoin as a reward redemption option.

This was all pretty small potatoes in the travel world until very recently.

Traveling on Bitcoin’s virtual dime got an added air of legitimacy last  week when one of the major players in the travel market finally began accepting the currency. Expedia.com now accepts the virtual currency for payments for hotel rooms on their website.

“We’re continually looking at ways consumers want to pay for their travel; Bitcoin is a great example of how Expedia is investing early in an array of payment options to give our customers and partners more choice in the ways they interact with us,” said Michael Gulmann, Vice President, Expedia Global Product.

Companies accepting Bitcoin typically contract a third-party payment processor to integrate a bitcoin support system into the customer experience and to mitigate their risks.

Expedia partnered with Coinbase as their third-party bitcoin payment processor.

Customers who want to use bitcoins as a form of payment can select it as an option along with the other traditional methods including Visa, MasterCard, American Express, Discover, JCB, Diners Club and PayPal.

“Bitcoin is very attractive to merchants of all kinds because it is cheaper and faster,” said Jerry Brito, a Senior Research Fellow at the Mercatus Center at George Mason University. “With Bitcoin, the fees are also much smaller.”

Brito noted that Bitcoin also opens up a travel merchant’s market to countries that may not have extensive credit card industries or the use of PayPal.

“Bitcoin is international,” Brito said. “There is no limit. Wherever there is internet connection there is the ability to send payments and that is attractive to a lot a lot of folks.”

We still have a ways to go before you can book an entire trip on Bitcoin. Major airlines and car rental companies have yet to hop on board, but we could see movement in those areas by the end of the year.

China has a growing interest in Eastern Europe in order to make inroads into Western Europe

EU and ChinaChina is a magnet for European companies. With a trade volume of almost $600 billion, and a trade deficit with China at about $150 billion, the European Union is China’s largest trading partner.

The EU and China are seeking to bring trade to $1 trillion by the end of this decade, in line with the EU-China 2020 Strategic Agenda for Cooperation. However, the benefits of this trade relationship are unevenly distributed in Europe, with more advantages for countries in the continent’s North.

China is seen as using Europe as a hedge against the United States. That is one reason why China already stepped up purchases of eurozone sovereign bonds. China has also invested across strategic industries in Europe and infused a lot of capital into property markets.

What about China and the countries of Central and Eastern Europe? While China’s interests in the region are manifold, Chinese companies so far have only invested in the low billions there.

To bolster financial cooperation, a credit line stretching up to €10 billion was one of the proposals put forward at last year’sChina-CEE leaders’ summit. It also allowed for the establishment of branches of Chinese financial institutions in Eastern Europe.

China searches for new markets

China looks at the CEE countries primarily as a market for its own strategic industries, exports, and as a large window into Western European markets.

As Beijing continued to look for new markets, it made a pledge to double trade, although increasing imports of Central and Eastern European products to China seems relatively challenging.

Central and Eastern Europe-made products cannot compete on price with the lower-cost products made in China, nor do the region’s companies innovate enough to compete on quality in the Chinese market.

China also offered to satisfy the urgent needs for infrastructure in CEE (such as in high-speed and freight railways, nuclear and other forms of power, roads, ports and telecommunications).

Through investments in central Europe’s infrastructure, Beijing wants to accelerate the creation of a network of ports, logistics centers and railways to distribute Chinese products and bolster East-West trade.

Finding more energy abroad

Another important pillar of China’s expansion policy concerns securing its present and future demand for commodities, mainly by investing in countries rich in natural resources.

Especially attractive is the Balkan energy sector. Major western utility companies are unwilling to make risky investments, which gives China some options. Countries such as Albania, Montenegro and Bosnia-Herzegovina are attractive for their hydropower capacities. Macedonia, Serbia and Croatia attract investment for their wind energy potentials.

More generally, China is keen to proceed with projects in nuclear, wind power, telecommunications and high-speed railway sectors. It has agreed to build a high-speed rail line linking Hungary to Serbia and pledged to help Romania connect with Hungary.

Where to from here?

For Beijing, trade relations with Southeast Europe mainly focus on exchanges with the largest and newest EU countries. The still transitional economies of the Southeast Europe allow China to circumvent some of the EU’s anti-dumping regulations and export products directly to a market of 800 million people thanks to FTAs with EU.

In November 2013, during his meetings in Bucharest with 16 prime ministers from the Central and Eastern European countries, Chinese Premier Li Keqiang called for wide-ranging, multi-tier cooperation aimed at doubling trade and investment in five years.

However, China is not exactly an easy partner for the EU. Controversial issues include intellectual property rights, price distortions due to subsidize dumping, unequal conditions for market access, as well as discrimination against EU companies in Chinese government tenders.

And within Europe, although China and the EU signed a strategic partnership in 2004, there is a lack of common understanding in Europe about strategic policies towards China.

Fusing Chinese industry and European technology

One of the most significant strategic objectives of China’s investment in Europe is to engage more closely with the continent’s research and development networks.

To some extent, China continues to depend on technology from Europe and the United States. China is not yet an innovation powerhouse, although its spending on R&D is rising very rapidly.

China still spends less than half as much as the EU as a whole and only one-third of what the United States spends on R&D. Chinese companies are good at incremental innovation, but they lag behind advanced countries when it comes to disruptive innovation.

Less than 6% of Chinese patents are protected by global patents, compared to 49% of U.S. patents. Fifty percent of total exports and more than 90% of China’s high-tech exports are produced by foreign companies operating there.

For Europe, China represents a huge economic opportunity. Chinese labor and capital working alongside European rules and technology — carefully managed — could create significant opportunities for both economies going forward.

DISH Network joining the Bitcoin revolution

bitcoin-value-thousand-dollars-.siDish Network Corp. (DISH) said it would begin accepting bitcoin as payment starting in the third quarter.

The satellite TV service said it would be the biggest company to accept the virtual currency.

“We always want to deliver choice and convenience for our customers and that includes the method they use to pay their bills,” Dish operating chief Bernie Han said in a release. “Bitcoin is becoming a preferred way for some people to transact, and we want to accommodate those individuals.”

Dish said it would use Coinbase as its processor for the payments, specifically through the platform’s Instant Exchange feature, which exchanges bitcoin payments to U.S. dollars. Dish’s fiscal third quarter begins on July 1.

The option will be available for customers who choose to make one-time payments through the company’s mydish.com. Customers will still be able to make online payments through credit and debit cards, as well as through their bank accounts, Dish said.

The move comes amid a time of drastic change and consolidation in the pay-TV and telecommunications industries, while Dish, run by Charlie Ergen, has largely remained on the sidelines. Rival satellite TV service DirecTV agreed earlier this month to be acquired by AT&T Inc. for $49 billion, effectively eliminating two options for Dish: acquisition by AT&T and a merger with DirecTV.

Dish earlier this month posted an 18% decline in first-quarter profit amid higher expenses and tepid subscriber growth.

Meanwhile, bitcoin has faced increased scrutiny over its security risks and volatility.

A number of online retailers, including Overstock.com Inc. (OSTK) have previously unveiled plans to accept bitcoin as a form of payment on their sites. In March, the retailer said bitcoin holders had spent more than $1 million at Overstock.com in less than two months, surpassing the company’s expectations.

I have bought and continue to buy Alpha Natural Resources

us-flag-crayon8-521x400Coal producer Alpha Natural Resources (ANR) is having a terrible time in 2014. The company’s shares have been beaten down badly on the stock market, down almost 35% so far this year. The drop in coal prices and an uncertain demand for metallurgical coal have weighed on Alpha Natural’s performance this year. However, there could be some relief in sight for the company as its recent first-quarter results tell us.

A turnaround in progress

On the back of aggressive cost cutting, Alpha Natural managed to lower its loss in the first quarter as compared to the prior-year period. In fact, the company halved its loss to $55.7 million, or $0.25 per share, in the first quarter from a loss of $110.8 million, or $0.50 per share, in the same quarter last year. This was a tremendous performance considering its revenue was down almost 17% from last year. Alpha Natural reduced costs by almost 11% year over year and managed to turn in estimate-beating results.

Looking ahead, Alpha Natural’s aggressive cost-cutting moves should help the company improve its business further. The company is trying to build a new platform that would enable it to be more flexible and agile, allowing it to quickly respond to changing market conditions.

Positive signs for the future

Alpha Natural has been proactively managing its balance sheet as the company has extended the maturity profile of its debt obligations. It issued $690 million of senior convertible notes, with $355 million due late in 2017 and $345 million due in 2020. By using a significant portion of these proceeds to repurchase existing convertible notes, Alpha Natural has reduced its outstanding convertible notes maturing in 2015 from $824 million to $194 million.

In addition, Alpha Natural termed out its bank debt, which lowered its near-term repayment obligations significantly. In addition to successful convertible note offerings, Alpha Natural monetized a portion of its Marcellus gas acreage for a total consideration of $300 million, consisting of $100 million in cash and $200 million in shares of Rice Energy (RICE) at the IPO price, or approximately 9.5 million shares.

Also, the company is selling off its non-core assets. Late last year, Alpha Natural was engaged in four transactions to dispose certain non-strategic idle assets, according to management. The cash proceeds from these dispositions were modest. However, the transactions allowed the company to reduce liabilities, primarily asset retirement obligations, which will reduce future cash outflows from its idle properties.

Demand could pick up

However, cost cutting can take you some distance, but after that Alpha Natural will need to find ways to grow its top line. There are some positives for investors in this area as well. On the demand side, the World Steel Association is forecasting a 3.3% increase in 2014 global steel demand, a slight improvement over last year’s growth rate. More importantly, for Alpha Natural, the European Union steel demand is expected grow in 2014 with a forecasted growth rate of 2.1% versus an estimated decline of 3.8% in 2013.

On the supply side, limited growth is seen for 2014 as only a few mines are scheduled to come online. According to estimates, total exports in 2014 are estimated to increase by only about 10 million metric tons of which 6 million tons are from Australia. So, with favorable demand and supply signs, Alpha Natural can expect to see further improvements in its performance going forward.

In addition, the domestic thermal coal market is showing some promising signs. The continual coal spills experienced late last year have resulted in increased demand and interest in coal-fired electrical generation. This demand, in turn, is expected to accelerate the drawdown in utility stockpiles across the various regions.

Also, electrical generators and grid operators are focusing on the role of coal fire generation and are looking to maintain a reliable energy supply. Moreover, many utilities have not only been bringing coal generation back online, but are running it at full capacity.

According to Alpha Natural, the domestic market has strengthened and the company expects to get its share of any additional domestic demand in the markets it serves. It also continues to focus on thermal exports, recognizing the price sensitivity in these markets and the need to be opportunistic with the ability to clearly respond to opportunities available.

Conclusion

Alpha Natural does hold a weak balance sheet. Its cash position is just $970 million while it has a huge debt of $3.43 billion. However, as I saw above, the company has extended maturities, selling off non-core assets, and aggressively reducing costs. In addition, there’s a slight improvement expected in the end markets. So, investors could consider an investment in Alpha Natural as the stock is trading at depressed levels and it could see a turnaround going forward.

Bitcoin is Going Nowhere — A Quick Guide to Cryptocurrency

bitcoinatmBitcoin continues to gain greater traction in the media as a potential investment vehicle. Proponents praise their decentralization, convenience, and transparency. Over the past year, they have transformed from black market currencies to viable alternatives for traditional investments and existing currencies.

Bitcoin has soared from 10 cents in its early days to more than $1,200 by December 2013 as its exploding demand fascinated the media. Most people still have limited knowledge of how to use Bitcoin, let alone invest in it. Given its dual potential as both an investment and an electronic currency, it is important to understand the risks of this largely unregulated marketplace.

Growing Up is Hard to Do

Originally used as a way to barter on the black market site Silk Road, Bitcoin has now grown to cover several sectors and a variety of uses. It has spawned a multitude of imitations since its origins in 2009 and helped pave the way for cryptocurrency’s rapid growth as its market cap now exceeds $6 billion.

In February 2014, Mt. Gox, a major exchange that once handled over 70% of Bitcoin transactions, announced its loss of around 850,000 Bitcoins, valued at over $500 million. The collapse of this platform called into question the security of cryptocurrency and its ability to emerge into a mainstream currency.  The value of Bitcoins crashed overnight causing China to ban it as a currency, likely scaring off many potential investors.

Mining sacrifices your computer’s computational processes to solve complex problems that keep the respective cryptocurrency’s peer-to-peer infrastructure secure. “Miners” essentially validate every transaction in history, preventing double-spending and counterfeiting. For their contributions, miners are rewarded pieces of Bitcoins for transactions they have validated.

Because mining requires a substantial investment in computer hardware, energy, and time, many people prefer to obtain cryptocurrencies through exchange platforms. Currently, only the top ranking cryptocurrencies, such as Bitcoin, Peercoin, Dogecoin, or Litecoin, can be purchased through fiat currencies on major exchanges like VaultofSatoshi, Kraken, Coinex, and BTC-e. Not surprisingly, there are only a handful of platforms such as GoCoin that can efficiently process cryptocurrency transactions in what is still a fairly limited market.

Investment Alternative or the New PayPal?

Bitcoin is unique in the sense that it can be both an investment tool and a transactional platform. There are an estimated two to three million users of Bitcoin, many of whom hold the currency as an investment. There are real risks involved with investing in Bitcoin, as its value can fluctuate wildly. Many consumers and tech startups have supported the growth of Bitcoin as a transactional platform. The endorsement and consumption of Bitcoin spans across a multitude of categories including Virgin Galactic, Overstock.com, car dealerships, restaurants, and boutique shops. Spend Bitcoins, a currency directory, has nearly 6,000 companies on its database of retailers that accept Bitcoin.

Bitcoin transactions are like cash payments and do not require the customer to hand over substantial personal information, eliminating identity theft and chargeback issues. Some institutions claim Bitcoin is the new and superior PayPal and praise it for its low transaction costs. Recent IRS regulations denoting Bitcoin as “property” rather than currency for tax purposes will bring more transparency and security into the system. Some financial experts view this regulation as a move that puts Bitcoin on the path to becoming a true financial asset.

A Limitless Future

Overall, cryptocurrencies have a long way to go before they eclipse credit cards and traditional currencies as a tool for global commerce. They have displayed potential as an investment alternative, but are still not a must have asset class in your portfolio. In the next several years, cryptocurrencies are likely to evolve into a niche electronic currency that could become a realistic alternative to other electronic payment processing platforms.