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.

FCA ISSUES 146 ALERTS ON FIRST DAY OF CRYPTO RULES: The U.K.’s FCA said in a Monday statement that changes to legislation that bring cryptoasset promotions under its remit are now in force. “We issued 146 alerts about cryptoasset promotions on the first day of the new regime. We expect businesses including social media platforms, app stores, search engines, domain name registrars and payments firms to consider the alerts we have issued and play their part in protecting UK consumers from illegal promotions. We take a risk-based approach, so not all firms of potential concern will be added straightaway. This list will be continually updated as we identify firms which may be illegally communicating cryptoasset promotions and are failing to engage with us constructively. We also continue to remind people that purchasing cryptoassets remains high-risk and that they should be prepared to lose all their money.” (VYGVQ) that will permanently ban it from handling consumers’ assets. The agency is also filing suit against its former CEO, Stephen Ehrlich, for falsely claiming that customers’ accounts were insured by the Federal Deposit Insurance Corporation and were “safe,” even as the company was approaching an eventual bankruptcy. The complaint also names Stephen Ehrlich’s wife, Francine Ehrlich, as a relief defendant. In the federal court complaint, the FTC charges that from at least 2018 until it declared bankruptcy in July 2022, Voyager used promises that consumers’ deposits would be “safe” to entice them to hand over their funds. When the company failed, consumers lost access to significant assets they had saved, including ongoing salary deposits, college tuition funds, and down payments for homes, according to the complaint, which notes that consumers were locked out of their cash accounts for more than a month and lost more than $1B in crypto assets. The proposed settlement with Voyager and its affiliates will permanently ban the companies from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets. The companies also agreed to a judgment of $1.65B, which will be suspended to permit Voyager to return its remaining assets to consumers in the bankruptcy proceedings. Ehrlich has not agreed to a settlement and the FTC’s case against him will proceed in federal court. (read more)

COINBASE PRICE TARGETS LOWERED: On Tuesday, Barclays analyst Benjamin Budish lowered the firm’s price target on Coinbase (COIN) to $68 from $70 and kept an Underweight rating on the shares ahead of the Q3 report. Spot exchange volumes worsened every month throughout the quarter, and total volumes were the lowest since Q4 of 2020, the analyst said. While there are some potential catalysts for the stock, it “remains to be seen if these will drive P&L upside,” said the firm. (read more)

Meanwhile on Thursday, BofA lowered the firm’s price target on Coinbase to $60 from $63 and kept an Underperform rating on the shares. The firm reduced top line estimates for FY23 and FY24, which caused it to lower its adjusted EBITDA forecasts to $765M and $859M from $876M and $1.075B, respectively, for 2023 and 2024. Regulatory concerns remain and the firm expects the SEC litigation overhang to persist, the analyst added. (read more)

JPMORGAN MINER UPDATE: On Wednesday, JPMorgan initiated coverage of Marathon Digital (MARA) with an Underweight rating and $5 price target. Marathon is the largest bitcoin mining operator but has the highest energy costs and lowest margins, the analyst said. The bitcoin mining industry is at a crucial moment as management teams weigh the prospects of a bitcoin ETF, which may catalyze a rally, against record hash rate increases and the looming block reward halving that threaten industry revenues and profitability, said JPMorgan. The firm favors operators that offer the best relative value in light of their existing hash rate, operational efficiency, power contracts, funded growth plans and liquidity. (read more)

JPMorgan also upgraded Iris Energy (IREN) to Overweight from Neutral with a price target of $6.50, up from $6, implying nearly 100% potential upside from current levels. The upgrade reflects the company’s expansion progress at Childress and improving fleet efficiency, the analyst said. The firm continues to view Iris as one of the most efficient U.S.-listed operators and sees room for further hash rate growth at attractive power and rig prices at the new Childress location. JPMorgan updated estimates to reflect slightly higher out-year bitcoin prices and more resilient network hash rate growth following the halving. (read more)

Additionally, the firm initiated coverage of Riot Platforms (RIOT) with an Underweight rating and $6.50 price target. Riot has relatively low power costs and liquidity and is nearing completion of a large facility, but is “by far” the most expensive name in JPMorgan’s bitcoin mining coverage universe, the analyst said. (read more)

JPMorgan also initiated coverage of CleanSpark (CLSK) with an Overweight rating and $5.50 price target. CleanSpark is the firm’s top bitcoin mining pick, as it offers the best balance of scale, growth potential, power costs, and relative value, the analyst said. (read more)

CLEANSPARK ACQUIRES BITCOIN MINERS: On Wednesday, CleanSpark announced it had purchased 4.4 exahashes per second of Antminer S21 bitcoin mining machines. The machines, with deliveries set to begin in January 2024, were purchased with favorable terms, including 20% seller-based financing of the total purchase price, which is not due for 365 days after the machines are delivered. Once all machines are installed and hashing, the company expects to reach an operational efficiency of 23.5 joules per terahash for a 17.25% improvement over CleanSpark’s operational efficiency of 28.4 joules per terahash. (read more)

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

PRICE ACTION: As of time of writing, bitcoin dropped roughly 4% this week at $26,876 in U.S. dollars, according to CoinDesk.