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.

COINBASE GETS CRYPTO LICENSE IN FRANCE: Coinbase (COIN) has received a virtual asset service provider approval from French markets regulator AMF, allowing the company to broaden its services in an additional key European market, CNBC’s Ryan Browne reported Thursday. The VASP registration enables Coinbase to offer custody of digital assets, buying or selling digital assets in legal tender, trading of digital assets against other digital assets, and operating a digital asset trading platform. The registration represents a move by the U.S.-based company to expand in Europe as Coinbase faces a more uncertain regulatory environment in its home country. (read more)

Additionally on Tuesday, Compass Point raised the firm’s price target on Coinbase to $200 from $145 and kept a Buy rating on the shares. Crypto asset prices and overall market trading volumes have increased at a clip “well above our expectations” since the firm last updated its Coinbase Global estimates in early November, driven by the potential for lower interest rates in 2024 and excitement around the eventual SEC approval of spot Bitcoin ETFs, the analyst said. Spot ADVs are tracking nearly 50% above the firm’s prior estimate for Q4, and even higher in December, with Coinbase having participated in this upswing, the analyst added. (read more)

On Friday, JMP Securities raised the firm’s price target on Coinbase to $200 from $107 and kept an Outperform rating on the shares. The analyst said spot bitcoin exchange traded fund implications are bullish for Coinbase and the broader industry. The firm is “quite constructive” on industry-wide implications, saying new avenues of capital will be unlocked and positive price action will further accelerate adoption in the broader space as it has in past cycles. JMP believes higher retail trading spreads today are not an immediate threat to Coinbase. The company has the potential to become “one of the few network winners in an industry we expect to grow exponentially from here,” the firm said. (read more)

Meanwhile, Mizuho raised the firm’s price target on Coinbase to $54 from $35 and kept an Underperform rating on the shares. The analyst said rising bitcoin prices and higher volatility have driven Coinbase’s volumes up 90% versus Q3 levels. This implies the company’s Q4 revenue will be 25%-30% above consensus, the analyst said. However, the firm noted elevated volatility tends to also lure “advanced” traders back into the market, which can weigh on blended retail take rates. The Q4 revenue beat should be well-known, but a negative surprise on take rates is unlikely priced into the stock, contended Mizuho. The firm cited better than expected volume trends and a higher market multiple for the target increase. (read more)

MARATHON TO ACQUIRE MULTIPLE BITCOIN MINING SITES: Marathon Digital Holdings (MARA) announced Tuesday it has entered into a definitive purchase agreement to acquire two currently operational bitcoin mining sites, totaling 390 megawatts of capacity, from subsidiaries of Generate Capital, a total of $178.6M, or $458,000 per megawatt, to be paid in cash from Marathon’s balance sheet. This transaction represents Marathon’s first fully owned sites and marks the company’s official transition from an asset-light organization to one that manages a diversified and resilient portfolio of bitcoin mining operations. Currently, Marathon’s bitcoin mining portfolio consists of 584 megawatts of capacity, 3% of which resides in sites that are owned and/or operated by the company, and 97% of which is hosted by third parties. Following the close of this transaction, Marathon’s bitcoin mining portfolio will consist of approximately 910 megawatts of capacity, 45% of which will reside on sites directly owned by the company, and 55% of which will be hosted by third parties. In addition, the expansion opportunities at these sites substantially increase Marathon’s bitcoin mining pipeline and provide the company with the potential to double its current operational hash rate to approximately 50 exahashes of total operating capacity over the next 18-24 months. Under the terms of the agreement, Generate will transfer ownership of the data centers in Granbury, Texas and Kearney, Nebraska, both of which have third-party operators, to Marathon in exchange for $178.6M. The transaction is subject to customary closing conditions and is expected to close in 1Q24. (read more)

Following the news, H.C. Wainwright raised the firm’s price target on Marathon to $24 from $20 and kept a Buy rating on the shares. Marathon “remains at the top of our favorite list with yesterday’s announcement presenting marquis evidence of execution against past strategic statements while introducing a route to 50Eh/s over the next 18-24 months,” the analyst said. (read more)

Additionally on Thursday, Marathon announced it has added Anchorage Digital Bank National Association as a bitcoin custodian, increasing the number of Marathon’s bitcoin custodians from two to three. As of November 30, 2023, Marathon held 14,025 bitcoin on its balance sheet. (read more)

On Friday, B. Riley raised the firm’s price target on Marathon to $14 from $11 and kept a Neutral rating on the shares. The firm noted that its EBITDA estimates for 2024 at bitcoin spot prices, which account for the notably higher transaction fees, rose by “a substantial 113%, highlighting the significant operating leverage of the industry.” The firm is updating its estimates for Marathon following the company’s acquisition of BTC mining sites, raising its 2024 adjusted EBITDA estimate to $268M from $205M on the higher EH/s and hosting contribution. (read more)

STRONGHOLD PROVIDES PANTHER CREEK UPDATE: On Friday, Stronghold Digital Mining (SDIG) provided an operational update on its Panther Creek Plant. On November 20, the wholly owned plant experienced unexpected ash silo flow issues. As a result, the company operated the plant at a lower output while working to remedy the issue. From November 20 through December 7, Panther Creek operated at approximately 60% net capacity factor while importing the remaining electricity necessary to fulfill its data center needs. The company’s data center operations were unaffected during that period. While progress was made, on December 8, the company elected to shut off the plant for what was expected to be a short-term, unplanned outage to fully fix the ash silo. The company took these steps to ensure maximum uptime and availability during the coming winter months. The repairs were not completed until December 21, resulting in Panther Creek importing electricity between December 8 and December 21. Between December 12 and December 20, the Panther Creek data center was unexpectedly required to curtail load to between 10 MW and 50 MW due to PJM system reliability issues and a transmission line outage. In total, the company estimates that it incurred fuel costs and operations and maintenance expenses of approximately $1.5M beyond the scope of normal and expected operations. Panther Creek has resumed operations, and the Panther Creek data center is operating without limitations. The Panther Creek data center recently achieved a site-record hash rate of over 2 EH/s on December 3, with 100% hash rate utilization, and the company expects that it will reach that level again in the near future. (read more)

HUT 8 SELECTED TO BUILD OUT TEXAS SITE: On Monday, Hut 8 Corp. (HUT) announced it has signed an interim agreement to build out and install mining operations in connection with the Celsius Network bankruptcy proceedings at a site in Cedarvale, Texas. Once complete, the site will house approximately 66,000 miners and be powered by more than 215 MW of energy. Under the interim agreement with Celsius Mining, Hut 8 will provide end-to-end development services for the Cedarvale site, and construction is expected to begin in the coming weeks. The scope of the services to be provided includes site design, engineering, financial modeling, budgeting, accounting, construction management, procurement, logistics, and RFP coordination. (read more)

MICROSTRATEGY PRICE TARGET RAISE: On Monday, TD Cowen raised the firm’s price target on MicroStrategy (MSTR) to $630 from $565 and kept an Outperform rating on the shares. The firm believes the recently-adopted FASB rule change provides fundamental support for the recent bitcoin rally. Cowen said MicroStrategy remains an attractive vehicle for investors looking to gain Bitcoin exposure. (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, Riot Platforms (RIOT), Stronghold Digital Mining and TeraWulf (WULF).

PRICE ACTION: As of time of writing, bitcoin rose roughly 4% this week to $43,689 in U.S. dollars, according to CoinDesk.