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.

CLEANSPARK, GRIID ENTER MERGER AGREEMENT: CleanSpark (CLSK) and GRIID Infrastructure (GRDI) announced Thursday that they have entered into a definitive merger agreement pursuant to which CleanSpark will acquire all the issued and outstanding common stock of GRIID in an all-stock transaction. The total enterprise value, including payment and assumption of debt, of the transaction is $155M. Concurrent with the signing of the merger agreement, the companies also entered into an exclusive hosting agreement for all currently available power, of which 20 MW will be allocated to CleanSpark effective immediately. Under the terms of the merger agreement, GRIID stockholders will receive shares of CleanSpark common stock based upon an exchange ratio equal to the quotient obtained by dividing the aggregate merger consideration by the total number of shares of GRIID common stock issued and outstanding as of the closing date of the merger. CleanSpark will assume all outstanding debt and other obligations of GRIID pursuant to the merger. CleanSpark also provided GRIID with a $5M working capital loan and a pay-down bridge loan of approximately $50.9M that was used to satisfy certain obligations of GRIID at signing. The loan is secured and is senior to all other outstanding debt of GRIID. The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to close in the third quarter of 2024. The acquisition is subject to GRIID shareholder approval and other customary closing conditions. (read more)

RIOT NOMINATES THREE TO BITFARMS BOARD: Riot Platforms (RIOT) announced Monday that it has requisitioned a special meeting of Bitfarms (BITF) shareholders to reconstitute the Bitfarms Board of Directors. Riot currently owns approximately 14.9% of Bitfarms, making it Bitfarms’ largest shareholder. The Special Meeting will give Bitfarms shareholders the opportunity to vote on the removal of Chairman and Interim CEO Nicolas Bonta, director Andrés Finkielsztain and any individual who fills the current vacancy created by the resignation of co-founder Emiliano Grodzki. The company said, “Riot believes that Messrs. Bonta and Finkielsztain bear direct responsibility for the Bitfarms Board’s poor corporate governance practices and consistent inability to realize Bitfarms’ full potential…To replace these individuals, Riot has nominated three exceptional candidates: John Delaney, Amy Freedman and Ralph Goehring. Each of the Nominees is independent of Riot and Bitfarms and is ideally qualified to help restore shareholders’ confidence in the Bitfarms Board…The bottom line is this: over the course of more than a year of attempting to engage constructively with the Bitfarms Board regarding a potential combination of Bitfarms and Riot, it has become evident to Riot that good faith negotiations simply will not be possible until there is real change in the Bitfarms boardroom. The culture of the current Bitfarms Board is founder-driven, and Riot believes it prioritizes the interests of individual directors over what is best for Bitfarms and its shareholders.” Riot also announced that it has formally withdrawn its previous proposal to acquire all Bitfarms common shares at a price of $2.30 per share. (read more)

Following the announcement, Bitfarms confirmed that it had received the shareholder meeting requisition and issued the following statement: “The Bitfarms Board of Directors and management team are committed to acting in the best interests of the company and all of its shareholders. In that regard, the Board established a Special Committee of independent directors to conduct a strategic alternatives review process to thoroughly evaluate all opportunities to maximize shareholder value. The Special Committee determined that Riot’s April 22, 2024 proposal of $2.30 per share significantly undervalued the company and offered to enter into a confidentiality and standstill agreement with Riot and provide additional information about the company so that Riot could improve its proposal. Since that time, the Special Committee has repeatedly invited Riot to participate in the process, even executing the confidentiality and standstill agreement proposed by Riot. The Special Committee is disappointed that Riot declined to engage constructively and participate in the process, and instead has continued to take steps to attempt to undermine the integrity of the process and harm the interests of other Bitfarms shareholders.” (read more)

COATUE TO INVEST $150M IN HUT 8: Hut 8 Corp. (HUT) announced Monday that it has entered into a definitive agreement with a fund managed by Coatue Management, pursuant to which Coatue has agreed to invest $150M into the company through a convertible note. “We are committed to supporting innovators advancing AI and believe that compute capacity is crucial to unlocking significant growth across the ecosystem,” said Philippe Laffont, Founder and Portfolio Manager of Coatue. “We believe that Hut 8 is well-positioned to accelerate new compute capacity and can capitalize on the opportunity it will bring.” The closing of the issuance of the Note is expected to be completed on or prior to July 11, 2024, subject to customary closing conditions. (read more)

On Thursday, Canaccord raised the firm’s price target on Hut 8 Corp. to $22 from $14 and kept a Buy rating on the shares. The analyst says the Core Scientific (CORZ) and CoreWeave deal put into context the value of having sites and power that could support the growing demand for high performance computing. There are some companies that have been working behind the scenes to take advantage of this opportunity and Hut 8’s analyst day last week provided confidence in the company’s ability to do that, the analyst said. The firm believes investors could see some positive announcements in the coming months as it relates to the company’s 1.1GW development opportunity. (read more)

MICROSTRATEGY INITIATED WITH A BUY: On Tuesday, Maxim initiated coverage of MicroStrategy (MSTR) with a Buy rating and $1,835 price target. MicroStrategy’s long-standing position delivering analytics software to enterprises makes it “a unique platform” to integrate artificial intelligence, while the company has also accumulated 226,331 bitcoin as of June 20, currently valued at about $13.4B and representing 55% of the stock’s value, the analyst saod. The firm’s $1,835 price target is based on its estimated 2025 value of the company’s bitcoin holdings as it models the value of bitcoin will reach $136,000 at year-end 2025 along with a multiple to 2025 software revenue estimates set at a premium to the peer group given the ongoing transition to cloud, the analyst noted. (read more)

Meanwhile on Monday, Canaccord lowered the firm’s price target on MicroStrategy to $1,826 from $2,047 and kept a Buy rating on the shares. The firm said the company has recently been using its full capital structure by issuing a series of converts. Canaccord views this strategy as potentially more accretive given what have been attractive conversion premiums in the converts. Canaccord said their new price target is derived by assuming 20% one-year appreciation to BTC versus current spot, a 15% increase in value to the software business and the assumption that the current SOTP premium remains intact. (read more)

COINBASE SUES SEC, FDIC OVER FOIA REQUESTS: Coinbase (COIN) has filed two lawsuits against the U.S. Securities and Exchange Commission and the Federal Deposit Insurance Corporation for not complying with Freedom of Information Act requests, The Block’s Sarah Wynn reported Thursday. The company has asked a court to force the agencies to comply with their request. “For nearly two years, a wide array of federal financial regulators… have used every regulatory tool at their disposal to try to cripple the digital-asset industry,” according to the complaint filed against the FDIC. “This FOIA lawsuit seeks to bring to light the FDIC’s role in that unlawful scheme.” (read more)

Additionally on Thursday, Coinbase announced a partnership with Stripe. The company said, “The partnership will launch with three key integrations designed to increase onchain adoption and provide faster, cheaper financial infrastructure: Stripe is adding USDC on Base to their crypto payouts product to enable Stripe platforms to make faster, cheaper money transfers to over 150 countries. Stripe is adding USDC on Base to their fiat-to-crypto onramp to enable customers in the US to convert fiat to crypto faster than ever. Coinbase is adding Stripe’s fiat-to-crypto onramp to Coinbase Wallet to allow people to buy crypto instantly with credit cards and Apple Pay.” (read more)

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

PRICE ACTION: As of time of writing, bitcoin dropped about 4% this week to $61,362 in U.S. dollars, according to CoinDesk.