As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week’s top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
COINBASE REPORTS Q1 EARNINGS: On Thursday, Coinbase (COIN) reported first quarter loss per share of 34c on a revenue of $736M, which compared to loss per share of $1.98 on a revenue of $1.16B for the same period last year.
“This quarter represented a turning point in our drive towards building a company that is more efficient and financially disciplined; a company that is able to do more for less. We reduced costs, doubled down on operational excellence and risk management, and continue to drive product innovation and regulatory clarity. Our efforts are showing meaningful progress,” the company said. “The crypto industry continues to be volatile, as evidenced most recently by the disruptions in the banking sector and ongoing regulatory uncertainty. While we can’t predict the outcome of these events, we continue to focus on our cost reduction efforts and to operate towards our goal of improving Adjusted EBITDA in absolute dollar terms versus full-year 2022.”
Following the report, JPMorgan analyst Kenneth Worthington raised the firm’s price target on Coinbase to $59 from $55 and kept a Neutral rating on the shares. The company’s Q1 results were substantially better than modeled but the outlook "generally doesn’t seem as good," the analyst said. Coinbase’s volumes are under further pressure in Q3 despite much higher crypto prices, said the firm. Meanwhile, Barclays analyst Benjamin Budish lowered the firm’s price target on Coinbase to $61 from $74 and kept an Equal Weight rating on the shares. The company’s Q1 adjusted EBITDA came in at $284M, well ahead of estimates, driven by both stronger revenues and lower costs, the analyst said. Additionally, Piper Sandler lowered the firm’s price target on Coinbase to $65 from $70 and kept an Overweight rating on the shares. The company reported a Q1 beat and believes real progress towards bi-partisan crypto legislation could advance by the end of Q2, the analyst said. The firm believes Coinbase’s international expansion not only provides an opportunity but also a hedge.
Additionally in a Tuesday blog post, Coinbase said, "Coinbase is dedicated to partnering with high-bar regulators across US and non-US jurisdictions to help update the financial system by developing additional solutions and products, leveraging our high standards of customer protection and robust risk management frameworks. With the recent approval of our regulatory license from the Bermuda Monetary Authority, BMA, today we are excited to announce the launch of Coinbase International Exchange.”
STRONGHOLD, CANTALOUPE ENTER HOSTING AGREEMENT: Stronghold Digital Mining (SDIG) announced Thursday it has entered into a new two-year hosting agreement with Cantaloupe Digital, a subsidiary of Canaan (CAN). On April 27, the company signed a two-year hosting agreement with Cantaloupe, whereby Stronghold will operate 2,000 A1346 and 2,000 A1246 bitcoin miners supplied by Canaan, with total hash rate capacity of 400 PH/s. The agreement has the following key terms: Two-year term, with no unilateral early termination option. Stronghold will receive 50% of the bitcoin mined by the Canaan miners and receive payments from Canaan equal to 55% of the net cost of power at the company’s Panther Creek plant, in dollar-per-megawatt-hour terms, calculated on a monthly basis. Stronghold will retain all upside associated with selling power to the grid, and, if Stronghold elects to curtail the Canaan miners to sell power to the grid, Canaan will receive a true-up payment that represent estimates of the bitcoin mining revenue would have been generated had the miners not been curtailed. The A1246 bitcoin miners are to be installed by May 15, and the A1346 bitcoin miners are to be installed by June 15.
MICROSTRATEGY POSTS Q1 EARNINGS: On Monday, MicroStrategy (MSTR) reported Q1 EPS of $31.79 on a revenue of $121.9M, which compared to a loss per share of $11.58 on a revenue of $119.3M last year.
“In Q1, we strengthened our capital structure by reducing leverage by fully repaying our bitcoin-backed loan. We also continued to strategically manage our balance sheet through the addition of 7,500 bitcoin in the quarter for a total of 140,000. Our goals for the enterprise analytics software business remain to grow our revenues and transition that business to the cloud while rigorously managing costs and strengthening margin as we focus on product innovation and winning market share,” said CFO Andrew Kang.
As of March 31, 2023, the carrying value of MicroStrategy’s digital assets was $2B, which reflects cumulative impairment losses of $2.172B since acquisition and an average carrying amount per bitcoin of approximately $14,289. As of March 31, 2023, the original cost basis and market value of MicroStrategy’s bitcoin were $4.172B and $3.986B, respectively, which reflects an average cost per bitcoin of approximately $29,803 and a market price per bitcoin of $28,468.44, respectively.
MAWSON SIGNS 24MW SITE IN OHIO: Mawson Infrastructure Group (MIGI) announced Monday that it entered into agreements for a new site in Corning, Ohio, with initial capacity for 24MW. The company expects that the site has an additional 26MW of potential capacity upside, taking the total site to 50MW, subject to further infrastructure investment. The site has been signed on a long-term lease. The site is an addition to the existing 240MW of capacity that Mawson has online and under development in the surrounding area. It is intended that the site will be online to the full initial 24MW capacity in Q3, providing a possible increase in deployable hashrate of up to 1.0EH. Mawson expects the site to initially host 12 MDCs and 7,056 miners. The company expects to have a mixture of self-mining and hosting on site but will make a further decision on the breakdown closer to energization.
ARGO BLOCKCHAIN UPGRADE: H.C. Wainwright upgraded Argo Blockchain (ARBK) on Monday to Buy from Neutral with a $2.50 price target. New machines, more efficient Quebec mining, Galaxy’s Texas power negotiation, and cost control could boost Argo’s cash flow above current thinking, the analyst said. Critical for Argo’s success is the advancing relationship with Galaxy to a mutually beneficial status as Galaxy now sees mining revenue diversification, contended the firm. It said the financial reset on the Helios sale stabilizes Argo’s foundation for growth. Additionally on Wednesday, Canaccord analyst Joseph Vafi raised the firm’s price target on Argo Blockchain to $1.45 from $1.00 and kept a Hold rating on the shares. The analyst said after what can only be described as a perfect storm of negative events, Argo has emerged on the other side after a tumultuous 2022. The firm is encouraged that the company has retained its mining fleet and increased its hashrate in 2022.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Ideanomics (IDEX), Riot Platforms (RIOT), Overstock (OSTK), and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin was roughly flat this week at $29,022 in U.S. dollars, according to TradeBlock.
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