Here’s What You Missed in Crypto This Week

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.

BLACKROCK REFILES FOR BITCOIN ETF: BlackRock (BLK) refiled paperwork with the U.S. Securities and Exchange Commission through Nasdaq (NDAQ) to add new details to its proposal for a bitcoin exchange-traded fund, Bloomberg’s Vildana Hakric and Katie Greifeld reported Monday. The exchange submitted a new application indicating that Coinbase (COIN) will provide market surveillance for the proposed ETF, which came after the SEC said that initial filings by issuers were deemed to be insufficient. A number of other companies amended their bitcoin ETF proposals last week including Fidelity Investments (FNF), Invesco, Van Eck, 21Shares and WisdomTree (WT). (read more)

COINBASE DOWNGRADE: Piper Sandler analyst Patrick Moley downgraded Coinbase on Wednesday to Neutral from Overweight with a price target of $60, down from $65. The analyst cited valuation and a belief that the recent case brought forth by the SEC, as well as the continued lack of regulatory clarity in the U.S., has created “too much uncertainty to prudently project revenues in future years” for the downgrade. Coinbase shares are up 126% year-to-date and are up 55% since June, driven by a combination of rising crypto prices and a number of large asset managers filing for spot bitcoin exchange traded funds, the analyst said. However, rising crypto prices have not translated to increased trading volumes for the company in recent quarters and the timing of a spot bitcoin ETF approval “is anyone’s guess,” said Piper. In Q2, the firm expects Coinbase to report its lowest quarterly trading volumes and monthly transacting user totals in over two years. (read more)

ASIC SEARCHES BINANCE OFFICES: The Australian Securities and Investment Commission conducted searches at several Australian offices of cryptocurrency exchange Binance, Bloomberg’s Amy Bainbridge and Sunil Jagtiani reported Wednesday, citing people with knowledge of the matter. The action comes as part of a probe into Binance’s now-defunct local derivatives business and amid regulatory crackdowns on the exchange in Australia, Europe and the U.S. (read more)

BITFARMS STARTS BAIE-COMEAU PRODUCTION: Bitfarms (BITF) announced Thursday it closed the acquisition of its newest farm in Baie-Comeau, Québec and immediately started production at the site. As a result, Bitfarms increased its target hashrate to 6.3 EH/s by the end of Q3. “Expanding operations to 11 farms marks another major milestone for Bitfarms,” said Geoff Morphy. “Leveraging our development expertise, we have built out Baie-Comeau infrastructure with equipment repurposed from the sale of our De La Pointe location and the cost-effective redeployment of miners from within our fleet. Baie-Comeau is positioned to deliver 22 MW of hydro power capacity when complete. The hashing began with an initial 3 MW, and we expect to reach 11 MW at the site in Q3. The remaining 11 MW is planned to come online in 2H24.” Bitfarms acquired an evergreen contract with the local utility in Baie-Comeau for 22 MW of hydro power, which included a 10-year lease in an industrialized area with the option to purchase at a fixed price throughout the lease term. Total consideration was C$2.5M, with C$1M, or 40% paid in cash, and 820,837 Bitfarms’ common shares, or 60%, issued at a price of C$1.83/share. (read more)

APPLIED DIGITAL FACES SHORT REPORTS: In a Thursday report, Wolfpack Research said it is short Applied Digital (APLD), calling it a “stock promotion.” “Applied Digital, a potato farm turned failed bitcoin miner, pumped up its stock in May by claiming to pivot from a floundering business hosting bitcoin miners, to becoming a low-cost AI Cloud service provider. The explosion of interest in AI after the emergence of Chat GPT has predictably attracted the worst promoters and scumbags to peddle fake AI wares to credulous investors, and our analysis indicates that APLD is one of these grifters because it is not an AI company,” the report reads. Further, Wolfpack highlighted that, “One clue that this is a stock promotion is the heavy involvement of our favorite bottom feeding investment bank, B. Riley, whose insiders…own 48.4% of APLD… The fact that the board has essentially remained unchanged, despite the fact that APLD has switched its business model every few months since it remerged in 2021, indicates that the board lacks competence.” (read more)

Additionally in a Thursday report, The Bear Cave’s Edwin Dorsey wrote that, “The Bear Cave believes Applied Digital relies on puffery over substance and is a perfect case study on our market’s bizarre underbelly of reverse mergers, microcaps, and shell companies.” Saying it sees “problems” at Applied Digital, Bear Cave also note that the shares are now up over 800% in the last twelve months as the company changed its name to focus on “next generation datacenters,” which made “a community of retail investors excited about the company’s ambition to ‘lead the datacenter evolution.'” (read more)

Meanwhile on Friday, Needham raised the firm’s price target on Applied Digital to $16 from $8.50 and kept a Buy rating on the shares. The analyst noted that the company’s new AI contracts show a strong pipeline of demand. The firm also believes that the downside on the stock is limited given Applied Digital’s stable BTC mining segment, which should remain solid until the March 2024 Halving. At enterprise value that is 7.7-times expected FY24 EBITDA, the market is pricing in little for the company’s AI and HPC businesses, Needham said. (read more)

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital (BTBT), Coinbase, Core Scientific (CORZ), Greenidge Generation (GREE), Marathon Digital (MARA), MicroStrategy (MSTR), Riot Platforms (RIOT), Stronghold Digital Mining (SDIG) and TeraWulf (WULF).

PRICE ACTION: As of time of writing, bitcoin rose roughly 1% this week to $30,293 in U.S. dollars, according to CoinDesk.