Tag: Cryptocurrency

Trump Promises to Make America the ‘Crypto Capital of the Planet’

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Trump announces plan to make the US the global crypto leader
– Trump Organization rebrands crypto platform to “World Liberty Financial”
– Crypto initiative intertwines with Trump’s political campaign and fundraising

In a bold move that blurs the lines between politics, business, and digital finance, former President Donald Trump has announced plans to position the United States as the global leader in cryptocurrency. This declaration comes as the Trump Organization rebrands its crypto platform, signaling a significant shift in the Republican presidential nominee’s stance on digital currencies.

Trump took to X (formerly Twitter) to share his vision with his 90 million followers. In a video message, he declared, “This afternoon, I’m laying out my plan to ensure that the United States will be the crypto capital of the planet.” This announcement marks a dramatic turnaround from his previous skepticism towards cryptocurrencies during his presidency.

The Trump Organization has rebranded its crypto platform from “The DeFiant Ones” to “World Liberty Financial.” This move appears to be a family affair, with Trump’s sons, Donald Jr. and Eric, actively promoting the initiative. Eric Trump announced the launch on X, hinting at “a new era in finance.”

While details about World Liberty Financial remain scarce, Donald Trump Jr. has suggested that the platform aims to rival traditional banking systems, emphasizing decentralized finance as a solution to perceived inequalities in access to financial services.

The timing of this crypto push, coinciding with Trump’s presidential campaign, raises questions about the interplay between his political ambitions and business interests. The campaign has reported raising $25 million in crypto-related donations, though this figure hasn’t been independently verified.

Trump’s embrace of crypto appears to be part of a broader strategy to court the crypto voting bloc and donors. By positioning himself as the pro-crypto candidate, Trump is tapping into a growing demographic of digital currency enthusiasts and investors.

The crypto platform launch follows Trump’s release of a new round of NFT trading cards, further cementing his foray into digital assets. Eric Trump has also hinted at the possibility of digital real estate offerings, potentially involving tokenized real-world assets or digital properties in the metaverse.

For investors, Trump’s crypto push could signal increased mainstream acceptance and potential regulatory changes favorable to the crypto industry. However, it also raises questions about the potential risks and rewards of politically aligned crypto ventures.

As the 2024 presidential race heats up, the intersection of politics and cryptocurrency is likely to become an increasingly important topic. Investors and voters alike will need to navigate this complex landscape carefully, considering both the potential opportunities and the inherent risks of this rapidly evolving sector.

Bitfarms’ Bold Move to Acquire Stronghold Digital Mining

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Bitfarms to acquire Stronghold Digital Mining in a $175 million deal
– Merger expands Bitfarms’ U.S. presence and power capacity significantly
– Transaction aims to boost environmental efforts and diversify beyond Bitcoin mining

Bitfarms Ltd. has announced its plans to acquire Stronghold Digital Mining, Inc. in a deal valued at approximately $175 million in a strategic move that’s set to reshape the Bitcoin mining landscape. This bold acquisition, slated to close in the first quarter of 2025, marks a significant milestone in Bitfarms’ growth strategy and signals a new era for both companies in the ever-evolving cryptocurrency sector.

The all-stock transaction will see Stronghold shareholders receive 2.52 Bitfarms shares for each Stronghold share they own, representing a 71% premium based on recent trading prices. This merger is poised to create a powerhouse in the Bitcoin mining industry, combining Bitfarms’ operational expertise with Stronghold’s strategic assets and power generation capabilities.

At the heart of this acquisition is Bitfarms’ ambition to expand and rebalance its energy portfolio. The company aims to increase its presence in the United States dramatically, projecting that nearly 50% of its 950 MW energy capacity will be based in the U.S. by the end of 2025. This move aligns with Bitfarms’ strategic plan to diversify geographically and tap into new power sources.

Stronghold brings to the table 4.0 EH/s of current hashrate, with the potential to scale up to approximately 10 EH/s in 2025 through fleet upgrades. The acquisition also includes two merchant power plants in Pennsylvania, providing 165 MW of nameplate generated power capacity. These facilities are recognized for their environmental benefits, converting mining waste into power and contributing to land reclamation efforts.

Perhaps most intriguing is the transaction’s potential to propel Bitfarms beyond traditional Bitcoin mining. The company sees opportunities to leverage high-performance computing (HPC) and artificial intelligence (AI) capabilities, potentially merging these technologies with their Bitcoin mining operations. This diversification strategy could open new revenue streams and position the combined entity at the forefront of technological innovation in the crypto space.

Environmental considerations play a crucial role in this merger. Stronghold’s reclamation facilities have already rehabilitated thousands of acres of toxic waste sites, addressing historical environmental issues dating back to the 1800s. Furthermore, the potential for carbon capture projects could position Bitfarms as a leader in sustainable cryptocurrency mining practices.

The merger is expected to yield significant synergies, with an estimated $10 million in annual run-rate cost savings. This efficiency boost, coupled with the expanded power capacity and technological capabilities, positions the combined company to weather the cyclical nature of the cryptocurrency markets more effectively.

However, the road ahead is not without challenges. The transaction still requires approval from Stronghold shareholders and various regulatory bodies. Additionally, the volatile nature of cryptocurrency prices and the ever-changing regulatory landscape pose ongoing risks to the industry.

As the crypto mining sector continues to mature and face increased scrutiny over its energy consumption, this merger represents a forward-thinking approach to addressing both economic and environmental concerns. By vertically integrating power generation, expanding into strategic locations, and focusing on sustainable practices, Bitfarms is positioning itself as a leader in the next generation of cryptocurrency mining operations.

In conclusion, the Bitfarms-Stronghold merger is more than just a consolidation of assets; it’s a strategic bet on the future of Bitcoin mining and digital asset infrastructure. As the industry evolves, this union could serve as a blueprint for how cryptocurrency companies can adapt, grow, and contribute positively to both technological advancement and environmental stewardship.

Crypto’s Political Surge: A New Frontier for Investors in the 2024 Election Landscape

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Political attention on cryptocurrency is growing, potentially influencing future regulations and market dynamics.
-Trump and other politicians are making pro-crypto promises, but implementation challenges remain.
– Investors should watch for policy shifts that could impact crypto markets and related investments.

As the 2024 U.S. presidential election looms, cryptocurrency has unexpectedly taken center stage, promising to reshape both the political and investment landscapes. The recent Bitcoin 2024 conference in Nashville served as a lightning rod for political attention, with figures from across the spectrum – most notably former President Donald Trump – making bold commitments to the crypto community.

Trump’s promises were sweeping: appointing a crypto Presidential Advisory Council, ousting SEC chair Gary Gensler, introducing crypto-friendly regulations, and even establishing a “strategic national bitcoin stockpile.” These pledges were echoed and amplified by other politicians, including Senator Cynthia Lummis and independent candidate Robert F. Kennedy Jr., who proposed acquiring up to 4 million bitcoins for a national reserve.

For investors, this surge in political interest signals potential seismic shifts in the regulatory environment. However, it’s crucial to approach these promises with a healthy dose of skepticism. Many proposed actions face significant legislative and legal hurdles, even in a favorable political climate.

The crypto industry’s growing political clout is evident in its fundraising prowess. FairShake, the largest crypto Super PAC, has amassed over $200 million, positioning itself as a formidable force in upcoming elections. This financial muscle could translate into increased lobbying power and potentially more favorable policies for the sector.

From an investment perspective, this political momentum could lead to several outcomes:

  1. Regulatory Clarity: A pro-crypto administration could usher in clearer regulations, potentially reducing market uncertainty and attracting more institutional investors.
  2. Market Volatility: Political developments will likely trigger significant price movements, creating both opportunities and risks for traders and investors.
  3. Mainstream Adoption: Increased political legitimacy could accelerate crypto’s integration into traditional financial systems, opening new investment avenues.
  4. Sectoral Impact: Companies in blockchain technology, cybersecurity, and fintech could see increased interest as crypto gains political traction.
  5. Global Competition: A U.S. pivot towards crypto-friendly policies could influence global crypto regulations and investments.

However, investors should remain cautious. The crypto market’s notorious volatility persists, and political promises often face significant obstacles in implementation. The recent ascension of Vice President Kamala Harris as the presumptive Democratic nominee adds another layer of uncertainty, given her undeclared stance on crypto regulation.

Bitcoin’s price action following the conference – surging above $70,000 before retreating – underscores the market’s sensitivity to political developments. Year-to-date, Bitcoin has risen over 50%, buoyed by increased institutional interest following the launch of Bitcoin ETFs.

As the election approaches, savvy investors should monitor several key areas:

  1. Proposed legislation affecting crypto regulations
  2. Appointments to key regulatory positions, especially at the SEC and CFTC
  3. Statements from major political figures on crypto policy
  4. Progress on initiatives like a national bitcoin reserve
  5. International reactions and policy shifts in response to U.S. developments

While political attention on crypto is growing, it’s important to note that widespread adoption and understanding remain limited. As Trump candidly observed, “most people have no idea what the hell it is.” This gap between political rhetoric and public comprehension presents both challenges and opportunities for investors.

For those considering crypto investments, a multifaceted approach is crucial:

  1. Diversification: Balance crypto investments with traditional assets to manage risk.
  2. Due Diligence: Thoroughly research projects and platforms before investing.
  3. Regulatory Awareness: Stay informed about evolving regulations both domestically and internationally.
  4. Technology Understanding: Grasp the underlying technology and its potential applications beyond currency.
  5. Long-term Perspective: Consider the long-term potential of blockchain technology beyond short-term price fluctuations.

As the 2024 election unfolds, the interplay between politics, regulation, and crypto markets will likely intensify. For investors, this evolving landscape presents a unique set of opportunities and risks. Those who can navigate the complex intersection of technology, finance, and politics may find themselves well-positioned in this new frontier of investing.

Remember, while the potential for high returns exists, so too does the risk of significant losses. As always, it’s crucial to approach any investment, especially in the volatile crypto space, with caution and in alignment with one’s risk tolerance and financial goals.

Ethereum ETFs Debut with $106M Inflow

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– Nine Ethereum ETFs launched on U.S. stock exchanges, attracting $106 million in net inflows on the first day
– BlackRock, Bitwise, and Fidelity ETFs saw the highest inflows
– Grayscale’s converted Ethereum Trust experienced significant outflows, likely due to higher fees
– The success of Ethereum ETFs follows the January launch of spot Bitcoin ETFs
– Crypto ETFs could impact traditional stock markets by offering new diversification options

The launch of nine exchange-traded funds (ETFs) tied to the spot price of Ethereum on U.S. stock exchanges marks another significant milestone in the integration of cryptocurrencies into traditional financial markets. On their first day of trading, these ETFs collectively attracted net inflows of $106 million, demonstrating substantial investor interest in gaining exposure to the world’s second-largest cryptocurrency through regulated investment vehicles.

The debut of Ethereum ETFs follows the successful launch of spot Bitcoin ETFs in January 2024, which saw considerable inflows and sparked increased institutional interest in cryptocurrencies. The positive reception of Ethereum ETFs suggests that the appetite for crypto-based investment products extends beyond Bitcoin, potentially paving the way for broader adoption of digital assets in mainstream finance.

Among the new Ethereum ETFs, BlackRock’s iShares Ethereum Trust ETF led the pack with $266.5 million in inflows, followed closely by the Bitwise Ethereum ETF with $204 million. Fidelity’s Ethereum Fund also saw significant interest, attracting $71 million in assets. These figures mirror the success of spot Bitcoin ETFs from the same issuers, indicating that established financial institutions are successfully leveraging their reputations to attract investors to crypto-based products.

An interesting development was the conversion of the Grayscale Ethereum Trust into an ETF. Despite launching with over $9 billion in assets, it experienced outflows of $484 million on its first day as an ETF. This outflow, significantly larger than what Grayscale’s converted Bitcoin ETF experienced in January, may be attributed to its higher fee structure compared to competitors. The market’s reaction suggests that investors are price-sensitive and willing to move their assets to more cost-effective options.

The introduction of Ethereum ETFs, following Bitcoin ETFs, represents a broader trend of cryptocurrencies gaining legitimacy in traditional financial markets. These products provide investors with exposure to digital assets without the complexities of direct ownership, such as wallet management and security concerns. This ease of access could potentially drive greater adoption of cryptocurrencies among both retail and institutional investors.

The impact of crypto ETFs on stock markets is multifaceted. Firstly, they provide a new asset class for investors to diversify their portfolios, potentially affecting allocations to traditional assets. Secondly, the performance of these ETFs could influence market sentiment, as cryptocurrencies are often seen as indicators of risk appetite. Lastly, the success of crypto ETFs may encourage more traditional financial institutions to develop crypto-related products, further blurring the lines between conventional and digital finance.

However, it’s important to note that the cryptocurrency market remains highly volatile, and regulatory scrutiny continues to evolve. The performance of these ETFs will likely be closely watched by investors and regulators alike, potentially influencing future policy decisions regarding digital assets.

Looking ahead, the success of Bitcoin and Ethereum ETFs may pave the way for similar products based on other cryptocurrencies. As the crypto ecosystem continues to mature, we may see ETFs tied to other major digital assets or even basket products that offer exposure to multiple cryptocurrencies.

In conclusion, the launch of Ethereum ETFs represents another step in the mainstream acceptance of cryptocurrencies. While it’s too early to determine their long-term impact, the strong initial interest suggests that investors are eager for regulated ways to gain exposure to digital assets. As the landscape continues to evolve, the interplay between cryptocurrencies and traditional financial markets will be an area of significant interest for investors, regulators, and market observers alike.

From Crypto to Computing: Bit Digital’s AI Pivot Pays Off Big

Posted on by slightbourne@noblecapitalmarkets.com

In a move that’s turning heads on Wall Street, Bit Digital (Nasdaq: BTBT) is doubling down on its artificial intelligence infrastructure play. The New York-based company, once primarily known for its cryptocurrency mining operations, has just inked a deal that could redefine its future – and potentially reshape the landscape of AI computing services.

On June 25, 2024, Bit Digital announced the expansion of a contract with a major high-performance computing customer. The numbers are eye-popping: an additional 2,048 GPUs, bringing the total to 4,096, with a contract value of approximately $275 million over three years. That’s $92 million annually, for those keeping score at home.

But what’s really intriguing here isn’t just the scale of the deal – it’s what it represents. Bit Digital is making a calculated pivot, leveraging its expertise in managing complex computing operations to carve out a niche in the booming AI infrastructure market. And they’re doing it with gusto.

The company isn’t just talking a big game; they’re putting their money where their mouth is. They’ve placed an order for 256 servers from Dell Technologies, packed with Nvidia’s coveted HGX H100 GPUs. These aren’t your run-of-the-mill graphics cards; they’re the cream of the crop for AI computations, and Bit Digital is betting big on their potential.

What’s particularly savvy about this move is how Bit Digital is financing it. They’re using a mix of cash, digital assets, and a sale-leaseback agreement for half of the new GPUs. This financial juggling act demonstrates a level of fiscal acumen that should pique the interest of potential investors. It’s a strategy that minimizes upfront capital requirements while maximizing potential returns – music to any investor’s ears.

But here’s where it gets really interesting: this deal puts Bit Digital tantalizingly close to its goal of a $100 million annualized revenue run-rate by the end of 2024. They’re now sitting at over 90% of that target. For a company that was once primarily focused on bitcoin mining, this represents a remarkable transformation.

CEO Sam Tabar’s comments suggest this is just the beginning. He’s talking about “robust growth trajectory” and “scaling even further as the year progresses.” It’s the kind of optimistic language that makes investors’ ears perk up, especially when it’s backed by concrete deals like this one.

Of course, it’s not all smooth sailing. The AI infrastructure market is heating up, with tech giants and startups alike vying for a piece of the pie. Bit Digital will need to leverage its first-mover advantage and continue to execute flawlessly to maintain its edge.

Investors keen on getting more details won’t have to wait long. Bit Digital is slated to present at the Noble Capital Markets Consumer/TMT Virtual Conference this week. It’s an opportunity to hear directly from the company’s leadership about their strategy and future prospects.

As the lines between cryptocurrency, blockchain, and AI continue to blur, companies like Bit Digital are positioning themselves at the intersection of these transformative technologies. Their ability to pivot from crypto mining to AI infrastructure demonstrates an agility that could serve them well in the fast-paced tech sector.

For investors, Bit Digital represents an intriguing proposition. It’s a company with roots in the volatile world of cryptocurrency that’s now making significant inroads into the AI boom. As the demand for AI computing resources continues to skyrocket, Bit Digital’s bold moves could position them as a key player in this burgeoning field.

While the risks inherent in such a rapidly evolving sector shouldn’t be overlooked, Bit Digital’s recent contract win and ambitious revenue targets suggest a company that’s not just adapting to change, but actively shaping it. As always, potential investors should do their due diligence, but for those looking to ride the AI wave, Bit Digital is certainly a company worth watching.

Robinhood Doubles Down on Crypto With $200M Bitstamp Buyout

Posted on by slightbourne@noblecapitalmarkets.com

Robinhood Markets is making its biggest bet yet on the booming crypto market. The popular trading platform announced a deal to acquire Bitstamp, one of the world’s oldest and largest cryptocurrency exchanges, for approximately $200 million in cash.

The blockbuster transaction represents Robinhood’s largest acquisition to date and a major escalation of its push into the digital assets space. By bringing Bitstamp’s established crypto exchange capabilities in-house, Robinhood is positioning itself to become a fierce competitor to industry giants like Binance and Coinbase.

Founded in 2011, Bitstamp has emerged as a leading crypto exchange particularly popular among European and Asian traders. Its core spot trading platform offers a deep pool of liquidity with over 85 digital assets available for trading. Critically, Bitstamp also holds around 50 operational licenses and registrations across the globe.

For the fast-growing Robinhood Crypto division, acquiring Bitstamp provides an immediate expansion of its product lineup and geographic reach. The deal comes as Robinhood’s crypto business is already experiencing explosive growth. In the first quarter of 2024, crypto revenues drove a massive earnings beat, underscoring the intense customer demand. However, the company is also facing headwinds from U.S. regulators.

Just last month, Robinhood disclosed that it received a Wells Notice from the Securities and Exchange Commission regarding its crypto trading practices. The SEC has staked out an aggressive position that many digital assets should be classified and registered as securities. In contrast, Robinhood and other major crypto firms have pushed back against what they view as regulatory overreach by the SEC into the crypto markets. Despite the legal turbulence, Robinhood intends to keep communicating with regulators as it moves forward with the integration of Bitstamp.

Analysts view Robinhood’s big crypto bet as ultimately positioning the company for further growth. The Bitstamp deal supercharges its global crypto capabilities at a time when adoption of bitcoin, ether and other digital assets is rapidly accelerating worldwide. An analyst stated the acquisition fits squarely with Robinhood’s crypto-first strategy and could be a game-changer, immediately making them a major player worldwide. The analyst reiterated a Buy rating and $15 price target on the stock.

Indeed, Robinhood’s shares spiked over 3% in pre-market trading as investors cheered the transformative deal. The stock has already surged 69% so far this year amid the company’s renewed focus on profitable growth after cost-cutting measures.

While the $200 million price tag is just a drop in the bucket for Robinhood’s over $6 billion war chest of cash reserves, the acquisition symbolizes its all-in embrace of crypto. By combining Bitstamp’s battle-tested exchange with its own fast-growing retail crypto platform, Robinhood is positioning itself for a major shake-up of crypto trading.

The deal is expected to close in the first half of 2025, pending any additional regulatory hurdles. But one thing is clear – Robinhood has gone full-crypto, and its fight for dominance in this rapidly evolving space is only just beginning.

Core Scientific Enters AI Compute Market with $3.5B Deal

Posted on by slightbourne@noblecapitalmarkets.com

In a significant development in the high-performance computing (HPC) space, Core Scientific, a leading digital infrastructure provider for bitcoin mining and hosting services, has announced a landmark deal with CoreWeave, an AI hyperscaler. The 12-year agreement will see Core Scientific deliver approximately 200 megawatts of infrastructure to host CoreWeave’s high-performance compute operations, positioning the company as a major player in the AI data center space.

This strategic move marks a significant expansion of Core Scientific’s hosting business and earnings power, while maintaining its strong bitcoin mining franchise. The deal is expected to generate over $3.5 billion in cumulative revenue for Core Scientific during the initial contract terms, with estimated average annual revenue of $290 million. This development highlights the growing importance of HPC in the tech industry and the opportunities it presents for emerging growth companies.

The Rise of High-Performance Computing

HPC is a critical component in various industries, including AI, scientific research, and cryptocurrency mining. The increasing demand for powerful computing capabilities has led to a surge in the adoption of HPC solutions. Core Scientific’s agreement with CoreWeave demonstrates the company’s commitment to meeting this growing demand and diversifying its business model.

AI Computing: A Key Driver of Growth

AI computing is a significant driver of the HPC market, with applications in various sectors, including healthcare, finance, and technology. The increasing adoption of AI solutions has led to a rise in demand for high-performance computing infrastructure. CoreWeave’s partnership with Core Scientific will enable the company to expand its AI compute capabilities, further solidifying its position in the AI hyperscale space.

Bitcoin Mining and HPC: A Synergistic Relationship

Core Scientific’s roots in bitcoin mining have provided a natural segue into HPC. The company’s existing infrastructure and expertise in high-power computing have enabled it to expand into the HPC space seamlessly. This synergistic relationship between bitcoin mining and HPC presents opportunities for companies like Core Scientific to leverage their existing infrastructure and expertise to tap into the growing HPC market.

Opportunities for Emerging Growth Companies

The HPC space presents significant opportunities for emerging growth companies. As demand for high-performance computing continues to outpace supply, companies like Core Scientific are well-positioned to meet customer needs with a much shorter time to power than greenfield data center projects. This deal demonstrates how small-cap companies can leverage their existing infrastructure and expertise to tap into the growing HPC market, providing a pathway for growth and expansion.

Investment Opportunities in the HPC Space

The HPC space offers attractive investment opportunities for investors seeking exposure to emerging growth companies. As the demand for high-performance computing continues to grow, companies like Core Scientific are poised to benefit from this trend. Investors can capitalize on this growth by investing in companies that are well-positioned to meet the increasing demand for HPC solutions.

In conclusion, Core Scientific’s strategic move into the AI compute space highlights the growing importance of HPC in the tech industry. This deal demonstrates the opportunities available for emerging growth companies in the HPC space and the potential for investors to capitalize on this growth. As the demand for high-performance computing continues to rise, companies like Core Scientific are poised to benefit from this trend, making them attractive investment opportunities for investors seeking exposure to the HPC space.

Bitcoin Mining Showdown: Riot Platforms’ Power Play for Bitfarms

Posted on by slightbourne@noblecapitalmarkets.com

In a bold move that could significantly reshape the cryptocurrency mining industry, Riot Platforms Inc. has made an unsolicited offer to acquire rival Bitcoin miner Bitfarms Ltd. for $950 million. This acquisition bid, which includes both cash and stock, values Bitfarms at $2.30 per share, a 20% premium over its pre-offer trading price. Riot’s aggressive strategy is driven by recent industry dynamics and Bitfarms’ internal challenges, and it has the potential to profoundly impact the Bitcoin mining landscape.

Riot Platforms, already a major player in the Bitcoin mining sector, has taken a 9.25% stake in Bitfarms, making it the largest shareholder. This move follows Bitfarms’ management turmoil, including the firing of interim CEO Geoffrey Morphy, who is now suing the company for $27 million in damages. Riot’s initial offer, made on April 22, was rejected by Bitfarms’ board without substantive dialogue. Undeterred, Riot plans to call a shareholder meeting to appoint new independent directors, signaling a clear intention to influence Bitfarms’ strategic direction.

The proposed acquisition highlights a significant trend in the Bitcoin mining sector: consolidation. This trend has been accelerated by the recent Bitcoin “halving,” an event that occurs approximately every four years and cuts the rewards miners receive for validating transactions by 50%. This reduction in rewards tightens margins and pushes miners to either scale operations or seek consolidation to maintain profitability.

For Riot, absorbing Bitfarms would create the largest Bitcoin miner globally, based on projected computing power growth. This expansion would significantly enhance Riot’s Bitcoin production capabilities, positioning it alongside industry giants like Marathon Digital Holdings Inc. and CleanSpark Inc. The increased scale and capacity would provide Riot with greater negotiating power, more efficient operations, and improved resilience against market fluctuations and rising energy costs.

Riot’s pursuit of Bitfarms sends a clear message to other players in the Bitcoin mining space: scale is essential for survival and success in the post-halving era. Smaller miners, already struggling with reduced revenues and limited access to capital, may find it increasingly challenging to compete against larger, resource-rich companies. This could trigger a wave of mergers and acquisitions as miners seek to consolidate resources, optimize operations, and leverage economies of scale.

For instance, Bitcoin miner Stronghold Digital Mining Inc. is already exploring strategic alternatives, including a potential sale. As the industry adapts to the new economic realities imposed by the halving, more companies might follow suit, either by seeking mergers or becoming acquisition targets themselves.

The consolidation trend among Bitcoin miners has broader implications for the cryptocurrency industry. Firstly, it could lead to increased centralization of mining power, potentially raising concerns about the decentralization ethos of Bitcoin. However, it could also result in more efficient and stable mining operations, reducing the risk of disruptions and enhancing the overall security and reliability of the Bitcoin network.

Moreover, large-scale miners like Riot, with significant resources and capacity, are better positioned to adopt sustainable practices and negotiate favorable energy contracts, potentially addressing some of the environmental criticisms faced by the industry.

Riot Platforms’ bid to acquire Bitfarms marks a pivotal moment in the evolution of Bitcoin mining. This strategic move underscores the importance of scale in navigating the post-halving landscape and sets the stage for further consolidation in the industry. For investors and stakeholders in the cryptocurrency space, this development highlights the dynamic and competitive nature of Bitcoin mining, where agility, resources, and strategic vision are key to thriving in an ever-evolving market. As the industry continues to mature, the actions of major players like Riot will undoubtedly shape the future of cryptocurrency mining and its role within the broader financial ecosystem.

Take a moment to take a look at Bit Digital, a large-scale bitcoin mining business with operations across the U.S. and Canada.

Ether ETFs Get Green Light, Ushering In New Era for Crypto Investing

Posted on by slightbourne@noblecapitalmarkets.com

The crypto world was abuzz this week as the U.S. Securities and Exchange Commission (SEC) gave the green light for the launch of exchange-traded funds (ETFs) that will track the price of ether, the cryptocurrency powering the Ethereum blockchain.

In a little-noticed release on Thursday evening, the SEC approved a rule change by the Chicago Board Options Exchange (CBOE) that effectively opens the door for ether ETFs to be listed and traded just like their bitcoin counterparts.

This landmark decision represents a major milestone for the crypto industry’s evolution into mainstream finance. It grants ether, after years of regulatory ambiguity, a legitimacy akin to that bestowed upon bitcoin last year when the first bitcoin ETFs hit the market.

“This is a huge development that really drives home ether’s commodity status from a regulatory perspective,” said Rachel Lin, CEO of crypto derivatives platform SynFutures. “It will allow investors, from retail to institutional, to gain exposure to ether through a regulated, familiar investment vehicle.”

Ether is the second-largest cryptocurrency after bitcoin with a market cap of around $220 billion. It has rapidly emerged as a crucial piece of infrastructure undergirding large swaths of crypto and blockchain applications beyond just a medium of exchange.

The Ethereum network hosts a multitude of decentralized apps and services, including large stablecoin ecosystems, decentralized finance (DeFi) platforms for lending/borrowing, and a rapidly expanding universe of blockchain-based games and metaverse projects. All these rely on ether as the “gas” that powers the network.

Major crypto companies quickly celebrated the ruling as catalyzing new growth for the ecosystem. “This approval from the SEC will allow millions of investors to embrace crypto in a familiar, regulated way,” said David Puth, CEO of cryptocurrency exchange CoinX.

The decision paves the way for asset managers to launch ether ETFs that directly hold the cryptocurrency, similar to existing bitcoin offerings like the Bitcoin ETF. This could drive significant new investment into ether from both institutional players seeking crypto exposure without holding the underlying asset, as well as retail investors who want a simple ether investment product available in traditional brokerage accounts.

However, some key questions remain around which specific ETF proposals will get approved, when they might begin trading, and whether they will be physically-backed with actual ether or employ indirect exposure through derivatives.

Leading ETF issuers like BlackRock, Fidelity, and WisdomTree have active filings for ether ETFs that could get a look. But smaller players like Cathie Wood’s Ark Invest were among the first movers on bitcoin ETF filings and could be better positioned for any initial ether product launches as well.

While the ether ETFs have a regulatory greenlight, they will still need to be approved on an individual basis by the SEC and the exchanges they list on. Industry analysts expect a speedy process, with the first launch potentially coming in the next few months.

For ether investors who have waited years for this moment, simple and convenient access to the world’s most actively utilized crypto network through traditional market infrastructure is almost at hand. The launch of ether ETFs may turbocharge investment into the Ethereum ecosystem – and accelerate the momentum behind crypto’s move into mainstream finance.

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Release – Bit Digital, Inc. Announces First Quarter of Fiscal Year 2024 Financial Results

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on BTBT

NEW YORK, May 15, 2024 /PRNewswire/ — Bit Digital, Inc. (Nasdaq: BTBT) (the “Company”), a sustainable platform for digital assets and artificial intelligence (“AI”) infrastructure headquartered in New York City, today announced its unaudited financial results for the First Quarter ended March 31, 2024. 

Financial Highlights for the First Quarter of 2024

  • Total revenue was $30.3 million for the First Quarter of 2024, a 266% increase compared to the First Quarter of 2023. The increase was primarily driven by the commencement of our Bit Digital AI business and by a higher realized bitcoin price.
  • Revenue from bitcoin mining was $21.9 million for the First Quarter of 2024, a 166% increase compared to the prior year’s quarter. The Company’s Bit Digital AI business, referred to as High performance computing services (“HPC”), began generating revenue in January 2024, and recognized $8.1 million of revenue during the quarter. The Company issued a one-time service credit of $1.3 million to its HPC customer as compensation for decreased utilization during the initial deployment period, which included testing and optimization phases. Illustratively, adding back this credit would yield pro forma gross margins of approximately 72% on a net basis compared to reported gross margins of 61% for the segment. Revenue from ETH staking was approximately $0.3 million.
  • The Company had cash, cash equivalents and restricted cash of $35.5 million, and total liquidity (defined as cash equivalents and restricted cash, USDC, and the fair market value of digital assets) of approximately $163.21 million, as of March 31, 2024.
  • Total assets were $291.1 million and Shareholders’ Equity amounted to $265.2 million as of March 31, 2024.
  • Adjusted EBITDA2 was $58.5 million for the First Quarter of 2024 compared to $1.5 million for the First Quarter of 2023.
  • GAAP earnings per share was $0.43 on a fully-diluted basis for the First Quarter of 2024 compared to a loss of $0.03 for the First Quarter of 2023.

Operational Highlights for the First Quarter 2024

  • The Company earned 410.7 bitcoins during the First Quarter of 2024, a 13% increase from the prior year. Growth was primarily driven by a higher active hash rate and partially offset by an increase in network difficulty.
  • The Company paid approximately $0.05 per kilowatt hour to its hosting partners for electricity consumed during the First Quarter of 2024.
  • The average fleet efficiency for the active fleet was approximately 28.3 J/TH as of March 31, 2024.
  • The Company earned 111.1 ETH in native staking and 1.3 ETH in liquid staking, respectively, in the First Quarter of 2024.
  • Treasury holdings of BTC and ETH were 956.4 and 16,031.43, respectively, with a fair market value of approximately $68.2 million and $58.5 million on March 31, 2024, respectively.
  • The BTC equivalent4 of our digital asset holdings as of March 31, 2024 (defined as if all ETH and USDC holdings were converted into BTC as of that date) was approximately 1,790.0 BTC5, or approximately $127.7 million.
  • As of March 31, 2024, we had 48,898 miners owned or operating (in Iceland) for bitcoin mining with a total maximum hash rate of 4.2 EH/S.
  • The Company’s active hash rate of its bitcoin mining fleet was approximately 2.76 EH/s as of March 31, 2024.
  • The Company purchased approximately 2,350 bitcoin mining units during the First Quarter of 2024.
  • Approximately 85% of our fleet’s run-rate electricity consumption was generated from carbon-free energy sources as of March 31, 2024. These figures are based on data provided by our hosts, publicly available sources, and internal estimates, demonstrating our commitment to sustainable practices in the digital asset mining industry.
  • The Company had approximately 3,008 ETH actively staked in native staking protocols as of March 31, 2024. The decrease relative to the prior quarter was due to the Company changing its provider for native staking solutions. As of April 30, 2024, the Company had approximately 17,184 ETH actively staked in native staking protocols.
  • On January 22, 2024, approximately 192 servers (1,536 GPUs) began generating revenue from the Company’s AI customer contract. Subsequently, approximately 64 additional servers (512 GPUs) commenced revenue generation on February 2, 2024.
  • On January 26, 2024, the Company finalized an agreement with Coinmint for up to 6 MW of additional mining capacity at Coinmint’s hosting facility in Massena, New York. This new agreement brings the Company’s total contracted hosting capacity with Coinmint to approximately 46 MW.

Management Commentary

“Our First Quarter 2024 results represent a strong start to the year with revenue growing by more than 250% and GAAP Net Income in excess of $50 million. The primary drivers for the improved performance were the commencement of our Bit Digital AI business and a higher realized bitcoin price.

We were well prepared for the halving which occurred in April 2024. Our balance sheet remains a core strength with over $160 million of total liquidity as of March 31, 2024, zero debt, and a growing revenue stream that is not correlated to the economics of bitcoin mining. While we continue to evaluate the post-halving bitcoin mining landscape, our goal of reaching 6.0 EH/s this year remains intact. We are actively engaged in discussions for both incremental hosting opportunities and potential acquisitions.

We continue to believe that capital allocation optionality provided by our complementary business lines is a key differentiator for our Company. We are actively evaluating a number of growth opportunities, both organic and inorganic, across each of our business lines. We are in the late stages of finalizing an agreement to double the size of the GPU fleet for our anchor client and our negotiations with prospective clients are progressing well. Our target of reaching a $100 million annualized revenue run-rate by year-end for this segment remains intact.”

About Bit Digital

Bit Digital, Inc. is a sustainable platform for digital assets and artificial intelligence (“AI”) infrastructure headquartered in New York City. Our bitcoin mining operations are located in the US, Canada, and Iceland. The Company has established a business line, Bit Digital AI, that offers infrastructure services for artificial intelligence applications.  For additional information, please contact ir@bit-digital.com or visit our website at www.bit-digital.com.

Investor Notice 

Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under “Risk Factors” in Item 3.D of our Annual Report on Form 20-F for the fiscal year ended December 31, 2023. If any material risk was to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. Future changes in the network-wide mining difficulty rate or bitcoin hash rate may also materially affect the future performance of Bit Digital’s production of bitcoin. Actual operating results will vary depending on many factors including network difficulty rate, total hash rate of the network, the operations of our facilities, the status of our miners, and other factors. See “Safe Harbor Statement” below.

Safe Harbor Statement 

This press release may contain certain “forward-looking statements” relating to the business of Bit Digital, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects,” or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Footnotes:

1 This figure excludes approximately 2,701 ETH that were transferred to an internally managed fund.

2 Adjusted EBITDA refers to earnings before interest expense, income tax expense and depreciation and amortization expense (“EBITDA”) adjusted to eliminate the effects of certain non-cash and / or non-recurring items.

3 This figure excludes approximately 2,701 ETH that were transferred to an internally managed fund.

4 “BTC equivalent” is a hypothetical illustration of the value of our digital asset portfolio in bitcoin terms. BTC equivalent is defined as if all non-BTC digital assets, comprised of ETH and USDC, were converted into BTC as of March 31, 2024, and added to our existing BTC balance. Conversion values are found using the closing price on coinmarketcap.com.

5 This figure excludes approximately 2,701 ETH that were transferred to an internally managed fund.

FTX Bankruptcy Plan Aims to Repay Most Customers in Full, Plus Interest

Posted on by slightbourne@noblecapitalmarkets.com

In a remarkable turn of events, the collapsed cryptocurrency exchange FTX has proposed a bankruptcy reorganization plan that could see nearly all of its customers fully repaid for their lost funds – and then some. According to a court filing released on Wednesday, FTX estimates it owes creditors around $11.2 billion, but has managed to recover between $14.5 billion and $16.3 billion to distribute.

The proposed plan states that customers whose claims amount to $50,000 or less, which accounts for around 98% of FTX’s creditors, will receive approximately 118% of their allowed claim amount. This means these customers would get all of their money back, plus an additional 18% payout on top.

This development comes as an incredible lifeline for the many retail investors and traders who had their funds frozen when FTX collapsed into bankruptcy in November 2022 amid fraud allegations against its founder Sam Bankman-Fried. At the time, new CEO John Ray III bluntly stated it was one of the most catastrophic corporate failures he’d seen in 40 years of restructuring experience.

So how did FTX manage to raise over $14 billion to repay creditors after such a spectacular implosion? The answer lies in a series of strategic asset sales and recovering investments made by the exchange and Bankman-Fried’s hedge fund Alameda Research.

One of the biggest windfalls came from selling most of FTX’s stake in artificial intelligence company Anthropic, which is backed by Amazon. That divestment alone netted FTX close to $900 million. The exchange also monetized various other venture investments and digital asset holdings.

However, FTX faced a significant hurdle – a large sum of cryptocurrency that went simply missing from the exchange after its bankruptcy. This denied them the ability to benefit from the massive price appreciation that leading cryptocurrencies like Bitcoin have seen since November, which is up over 270%.

As John Ray III noted, the company had to “look to other sources of recoverable value to repay creditors” beyond just holding crypto assets. Their aggressive asset sales and recovery efforts seem to have paid off.

While undoubtedly positive news for FTX’s customers, the proposed bankruptcy plan still requires approval from the court overseeing the case. The plan release also reminded that Sam Bankman-Fried was convicted on seven criminal counts related to FTX’s collapse and received a 25-year prison sentence.

If approved, the FTX bankruptcy would represent one of the most successful cryptocurrency exchange restructurings to date in terms of customer reimbursement. It’s a glimmer of hope amidst an industry still reeling from a crisis of consumer confidence following FTX and other high-profile blowups in 2022.

Of course, repayment is just one step in FTX’s long road to reorganization. Serious questions remain around tightening regulatory oversight and restoring trust in centralized crypto trading platforms. But for its customers at least, this plan could provide closure and make them remarkably whole after a near-total wipeout.

Release – Bit Digital, Inc. Announces Monthly Production Update for April 2024

Posted on by dburczyk@noblecapitalmarkets.com

Research News and Market Data on BTBT

NEW YORK, May 6, 2024 /PRNewswire/ — Bit Digital, Inc. (Nasdaq: BTBT) (“Bit Digital” or the “Company”), a sustainable platform for digital assets and artificial intelligence (“AI”) infrastructure headquartered in New York, announced its unaudited digital asset production and corporate updates for the month of April 2024.

Corporate Highlights for April 2024

  • In April 2024, the Company produced 119.3 BTC, a 12.5% decrease compared to the prior month. The decrease relative to the prior month was predominantly due to the reduction of bitcoin block rewards post-halving.
  • The Company’s active hash rate was approximately 2.76 EH/s as of April 30, 2024.
  • Treasury holdings1 of BTC and ETH were 992.4 and 20,241.7 with a fair market value of approximately $60.2 million and $61.0 million, respectively, on April 30, 2024.
  • The BTC equivalent2 of our digital asset holdings as of April 30, 2024, was approximately 2,010.1 or approximately $121.9 million.
  • The Company had cash and cash equivalents of $43.7 million as of April 30, 2024.

Bit Digital AI Update

  • As of April 30, 2024, the Company had 251 servers actively generating revenue from its initial Bit Digital AI contract. The Company earned an estimated $4.1 million of unaudited revenue from this contract during the month of April 2024.

Proof-of-Stake Highlights

  • The Company had approximately 17,184 ETH actively staked in native staking protocols as of April 30, 2024.
  • Bit Digital earned a blended APY of approximately 1.0% on its staked ETH position for the month of April 2024. The decrease in yield was due to the lag time in redeploying its staked ETH after changing its provider for native staking solutions.
  • The Company earned aggregate staking rewards of approximately 13.9 ETH during April 2024.

About Bit Digital

Bit Digital, Inc. is a sustainable platform for digital assets and artificial intelligence (“AI”) infrastructure headquartered in New York City. Our bitcoin mining operations are located in the US, Canada, and Iceland. The Company has established a business line, Bit Digital AI, that offers specialized cloud-infrastructure services for artificial intelligence applications.  For additional information, please contact ir@bit-digital.com or visit our website at www.bit-digital.com.

Investor Notice 

Investing in our securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks, uncertainties and forward-looking statements described under “Risk Factors” in Item 3.D of our most recent Annual Report on Form 20-F for the fiscal year ended December 31, 2023. If any material risk was to occur, our business, financial condition or results of operations would likely suffer. In that event, the value of our securities could decline and you could lose part or all of your investment. The risks and uncertainties we describe are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. In addition, our past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results in the future. Future changes in the network-wide mining difficulty rate or bitcoin hash rate may also materially affect the future performance of Bit Digital’s production of bitcoin. Actual operating results will vary depending on many factors including network difficulty rate, total hash rate of the network, the operations of our facilities, the status of our miners, and other factors.

Safe Harbor Statement 

This press release may contain certain “forward-looking statements” relating to the business of Bit Digital, Inc., and its subsidiary companies. All statements, other than statements of historical fact included herein are “forward-looking statements.” These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects,” or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website at http://www.sec.gov. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Footnotes:

1 “Treasury holdings” excludes approximately 2,701 ETH that were transferred to an internally managed fund.

2 “BTC equivalent” is a hypothetical illustration of the value of our digital asset portfolio in bitcoin terms. BTC equivalent is defined as if all non-BTC digital assets, comprised of ETH, and USDC, were converted into BTC as of April 30, 2024, and added to our existing BTC balance. Conversion values are found using the closing price on coinmarketcap.com.

Bitcoin’s Next Major Milestone Is A Few Days Away: The 2024 Halving

Posted on by slightbourne@noblecapitalmarkets.com

A once-every-four-years event in the Bitcoin world is rapidly approaching – the highly anticipated “halving.” Scheduled to occur around April 19th, 2024, this mechanism hard-coded into Bitcoin’s DNA is set to cut the rate of new BTC issuance in half. It’s a pivotal moment that could supercharge the crypto’s scintillating 2024 rally and reignite the bull market.

The halving is a deflationary feature designed to control Bitcoin’s supply over time by reducing the block reward paid to miners. From its inception in 2009 until 2012, miners received 50 BTC per validated block. That number was cut in half to 25 BTC at the first halving in 2012, then halved again to 12.5 BTC in 2016, and most recently to 6.25 BTC in 2020.

Now in 2024, the block reward is set to get cut again from 6.25 to around 3.125 BTC. By systematically slowing the issuance rate over time, Bitcoin’s supply is kept scarce in the face of theoretically increasing demand. This perceived scarcity is one of the factors purported to give Bitcoin its monetary value premium as a form of “digital gold.”

The halving events have historically preceded huge price surges in Bitcoin. A year after the May 2020 halving, Bitcoin rallied over 545%. Similar explosive rallies were witnessed after the 2016 and 2012 events as well. The logic is that as new supply slows after the halving, demand has to be higher to sustain price levels.

Some analysts think the halving impact has already been priced into Bitcoin’s blistering 2024 rally amid optimism around newly launched U.S. Bitcoin ETFs and rising institutional adoption. Since January 1st, BTC has surged over 60% to fresh all-time highs near $74,000.

But many Bitcoin veterans believe the halving could simply be the catalyst that reignites the next true crypto bull cycle akin to cycles past. They point to the recent rally as just the warm-up act before the main event. Adding fuel to the fire, the Federal Reserve is expected to cut interest rates later this year, thereby boosting risk assets like Bitcoin.

According to crypto exchange Bitfinex, Bitcoin could rally 160% in the 12-14 months post-halving to over $150,000 per coin if historical trends play out. While past returns are no guarantee of future performance, the scarcity effects of reduced supply could indeed supercharge demand.

Of course, doubters remain plentiful. There’s the argument that three prior data points create a small sample size from which to draw conclusions. The 2020 cycle was potentially inflated by pandemic stay-at-home narratives. And as Bitcoin matures, price movements may become more decoupled from fundamentals like the halving.

For crypto diehards though, the halving represents a once-in-a-cycle opportunity to get positioned ahead of the next major uptrend in Bitcoin prices. After spending 2022 and much of 2023 brutalized by the brutal crypto winter, many view it as the light at the end of the tunnel. Whether it marks just another bullish catalyst or something even bigger remains to be seen. But Bitcoin’s next milestone moment is fast approaching.