Crypto Miners Fumigate while Meta Sniffs Around Stablecoins
A Weekly Look into the Crypto World's Public Companies
Mining Miseries,Missing Coinbase Payments, and the Arrival of a Fresh Face
Frisky Facts from Decrypt delivers a sniff around the key publicly traded crypto companies each week. This week: Bitcoin miners chew on disappointment, Coinbase skims earnings, and Meta chases the scent of stablecoins.
The panting Bitcoin miners
Publicly traded Bitcoin miners had a gnarly week as the pack got wind of some coughs and sneezes.
Even piling up on BTC wasn't enough to shield MARA Holdings, boasting the MARA ticker on Nasdaq, from a choppy quarterly report on Thursday. You might remember, BTC was trading for around $83,000 at the end of March 31, and the company announced a whopping $2 billion stock offering to fill its pockets and buy BTC. It hasn't been shy about snatching BTC from the market either.
Yet, MARA still howled when it reported a $533 million Q1 loss yesterday, with the primary reason being a having to adjust the valuation of BTC on their balance sheet. But here's a kicker for you—mining output fell 19%, even though the company has now doubled its capacity since the Bitcoin network's halving.
If you’re scratching your head wondering, "What's up with halving?", let us explain. The Bitcoin network has seen four halving events reduce the reward paid to miners by half. The latest one last year saw the reward drop to 3.125 BTC.
Despite their struggles, investors still seem to be bobbing their tails, with MARA opening Friday trading for $15.16, up 6% from yesterday's close. Meanwhile, MARA's competitor Riot Platforms (tickered RIOT) managed to outsell all other miners by unloading 475 BTC in April, worth $38.8 million at the time. Time to pack away those mining rigs? Probably not. Investment bank Benchmark seems to think there's some more life in those puppies with a 5x price target of $3 and buy rating for Canaan, trading on Nasdaq under CAN.
Meanwhile, Meta's back in the kennel
Meta, trading under META on Nasdaq, is in the doghouse once again. Five unidentified sources whispered to Fortune that Meta is rummaging around in the soil of stablecoins, particularly for rewarding content creators on Meta's platforms.
It’s starting to feel like déjà vu because Meta attempted to launch its own stablecoin, Diem, back in 2019 but got a swift smack on the rear from regulators, forcing the company to abandon the project in 2022 by selling off its assets to the now-dead crypto-friendly bank Silvergate.
Shareholders are already tired of hearing about Meta's lagging side projects, like the Reality Labs group that's responsible for the Quest VR headset, augmented reality sunglasses, and Horizon Worlds metaverse game. Analysts have been crying "leaky bucket" since the company's Q1 earnings revealed the division had lost $4.2 billion in Q1, bringing its total losses to $60 billion.
Miss on earnings, look the other way!
It's no secret that flashy announcements before earnings reports usually mean things haven't been going so swimmingly for the quarter. This week, Coinbase played the sleight of hand card.
On Wednesday, the company showed the treasures it got from a FOIA request to dig up some public documents from the SEC, FDIC, and other agencies about their investigations into Ethereum and trouble de-banking crypto firms. Then, on Thursday, Coinbase set its sights on the nearly $3 billion acquisition of crypto derivatives exchange Deribit. But the company got a taste of its own medicine when its after-market earnings report revealed a significant slowdown in retail trading volume.
The global markets have been an unpredictable beast jerking around for months due to the messy trade negotiations.
CEO Brian Armstrong still has his eye on a gold medal for USDC, hoping to claim the title as the largest U.S. dollar-backed stablecoin in a couple of years. It's not just for bragging rights though, as USDC is still a huge money-maker for Coinbase. The partnership with Circle, which splits up the interest earned on the cash backing USDC tokens, lasts "indefinitely", according to Armstrong.
Extra Bits
- Crypto Treasuries: It's all about diversification now regarding Bitcoin. To that end, DeFi Development Corp., formerly Janover, has bought $11.2 million worth of Solana, and XRP just received a warm embrace worth $50 million from Wellgistics Health.
- Chatty Strategy: During the Strategy World event this week, Executive Chairman Michael Sayor revealed that AI chatbots have played a significant role in coming up with some of the financial products aiding the company in building its $52 billion Bitcoin fortune. Even the names "Strife" and "Strike" are the brainchild of AI.
- Some crypto miners, while licking their wounds from a tough week, are still frenetically mining cryptocurrency to stockpile coins like BTC and ETH.
- Despite the loss, MARA Holdings' CEO remains optimistic, reassuring shareholders that the crypto market will eventually recover, and the mining rigs will continue to churn out digital assets.
- Coinbase, the leading crypto exchange, is also hedging its bets, dabbling in the metaverse by launching its own gaming platform, World of Coinbase, powered by its native token, Coinbase Coin (CBD).
- Coinbase is not just limited to cryptocurrency; it has ventured into the world of digital art with its own NFT marketplace, Coinbase Arts, featuring a diverse collection of unique, blockchain-based art pieces.
- In a bid to reduce reliance on fossil fuels, some crypto miners are switching to renewable energy sources like wind and solar power, thereby minimizing their carbon footprint while earning crypto tokens.
- The Metaverse, a virtual reality space where users can interact, is not just limited to entertainment; it's also being explored for new business opportunities like concerts, shopping, and even conferences.
- The stablecoin market is rapidly expanding, with various companies racing to mint tokens backed by real-world assets to offer a hedged alternative to the volatile crypto market.
- ICOs (Initial Coin Offerings) are making a comeback, providing startups with an alternative means of raising capital without the strict regulations associated with traditional funding methods.
- The crypto Wallet market is highly competitive, with companies such as Ledger, Trezor, and Exodus offering secure hardware wallet solutions for users to manage their crypto assets safely.
- Lousy financial reporting and regulatory uncertainty have led some investors to question the long-term viability of publicly-traded crypto companies, with many preferring to shop for crypto tokens on secondary markets.
- Ethereum, the second-largest crypto by market capitalization, continues to outshine Bitcoin in innovation, with projects like DeFi, NFTs, and smart contracts opening up new avenues for users and driving the growth of the broader crypto ecosystem.
