A common phrase in finance for doing some low-profitability activity that has a big downside risk is "picking up pennies in front of a steamroller".
ftfy
Because sanctions are for their own good, right? Sanctions aren’t a threat, they are the punishment.
Other countries/companies shouldn’t do business with sanctioned countries, but obviously a sanctioned country can only benefit by breaking the sanctions.
It’s like being in prison in the USA: it’s natural - and in the prisoner’s best interest should they succeed - to try to run away.
https://www.reuters.com/technology/iran-uses-crypto-mining-l...
So I'd have to add a stipulation: it's for people in countries where people have access to surplus energy, but don't have access to better ways to export the energy.
I'm not.
In most developed countries, energy is one of the following:
- nationalized
- "privatized" (e.g. Russia, where the companies are partially govt-owned or the oligarchs are Putin cronies)
- privatized oligopoly
In any case, unless the government or the energy company wants to go into mining, the surplus can't just be transferred into mining.
So the question becomes, does the energy surplus actually translate into lower prices for consumers, and the consumers can then convert it into assets?
That's what I meant by "people": do the consumers of the energy actually have a way to monetize the surplus?
That is where that statement needs to stop.
When Genius Failed: The Rise and Fall of Long-Term Capital Management
Also, their famous trade was not actually selling volatility through writing options, but sla convergence trade in government bonds (short the most liquid one, which trades at a premium, get long a very similar bond which has the same cashflows but does not benefit from being blessed with the "most liquid" status). The crypto equivalent here is probably being long stablecoins, though even the best stablecoins have orders of magnitude less backing than Treasuries.
It was actually pretty internally controversial when LTCM started selling options in the last year or two before its cratering. The core thesis of the firm was pure arbitrage, where the risk was inherently capped. When the more aggressive faction started pursuing "statistical arbitrages", positions that could lose money but tended not to when repeated long enough, the old-school vanguard from Salomon revolted. Ironically both the pure arbitrage and statistical arbitrage positions got crushed in 1998.
The trade is to buy the stablecoin at $0.96 and wait for a chance to sell it at $0.995. Your investment thesis is that someone else is selling at $0.96 not because the issuer is going bust, but because they need the funds for something else.
As one CRT trader said: "It's like picking up dimes in front of a bulldozer. You can make a lot of money, but you have to keep your eyes on the bulldozer."
https://books.google.ch/books?id=OV07tT2nsLoC&pg=PA140&lpg=P...