Tesla CEO confirms bitcoin ownership as crypto exchange FTX valued at $18B
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.
TESLA ‘LIKELY’ TO RESTART BITCOIN PAYMENTS: Tesla (TSLA) CEO Elon Musk said the car maker will most likely restart accepting bitcoin as payments once the company performs due diligence on the amount of renewable energy used to mine the cryptocurrency, Reuters' Noor Zainab Hussain and Nivedita Balu reported Wednesday. "I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so Tesla would resume accepting bitcoin" Musk said at the B Word conference. "Most likely the answer is that Tesla would resume accepting bitcoin."
Additionally on Wednesday, Musk said that he and rocket company SpaceX own bitcoin, telling a panel that "I might pump, but I don't dump. I definitely do not believe in getting the price high and selling or anything like that," The Wall Street Journal's Rebecca Elliott reported. Musk didn't specify the size of his personal bitcoin holding or that of SpaceX, but Musk said he wasn't selling bitcoin, nor was SpaceX.
CRYPTO EXCHANGE FTX VALUED AT $18B: Despite a correction in bitcoin valuation over the past few months, cryptocurrency exchange FTX's latest funding round values the company at $18B, the Wall Street Journal's Alexander Osipovich reported Tuesday. The latest financing catapults the company "into the ranks of the world's highest-valued crypto companies," and provides a little reassurance of mainstream acceptance for the exchange, which bans Americans from trading on its main platform to evade coming in conflict of U.S. regulators. Investors in the funding round include private-equity firm Thoma Bravo, Japanese technology investor SoftBank (SFTBY), venture-capital firm Sequoia Capital and Third Point.
CORE SCIENTIFIC TO PUBLICLY LIST VIA SPAC MERGER: Digital asset miner Core Scientific Holding Co. and Power & Digital Infrastructure Acquisition Corp. (XPDI) announced Wednesday they have entered into a merger agreement pursuant to which XPDI will acquire the company. As a result of the transaction, which values the company at a pro forma enterprise value of approximately $4.3B, the combined company is expected to operate as Core Scientific and remain a publicly listed company on the NASDAQ stock market.
The transaction values the combined company at an implied fully diluted pro forma enterprise value of approximately $4.3B. The company was adjusted EBITDA positive for the year ended December 31, 2020. The transaction is expected to provide in excess of $300M in net cash proceeds to Core Scientific at closing, after transaction expenses and assuming no redemptions of shares by XPDI's existing public stockholders. Existing Core Scientific stockholders are retaining 100% of their equity in the combined company. Core Scientific stockholders will own approximately 89%, XPDI public stockholders will own approximately 8% and XPDI's sponsor will own approximately 2% of the issued and outstanding shares of common stock, respectively, of the combined company at closing.
The proceeds from the transaction are expected to fund mining equipment purchases and infrastructure build out as the company expands its leadership position. The Core Scientific and XPDI Boards of Directors have unanimously approved the proposed merger, which is expected to be completed in the fourth quarter.
MASTERCARD TO ENHANCE CARD PROGRAM FOR CRYPTO WALLETS: Mastercard (MA) announced Tuesday it will enhance its card program for cryptocurrency wallets and exchanges, making it simpler for partners to convert cryptocurrency to traditional fiat currency. Working with Evolve Bank & Trust and Paxos Trust Company and Circle, Mastercard and its partners will test this new capability to enable more banks and crypto companies to offer a card option to people wanting to spend their digital assets anywhere Mastercard is accepted.
ANALYST VIEW ON VOYAGER: Craig-Hallum analyst George Sutton lowered the firm's price target on Voyager Digital (VYGVF) on Monday to $28 from $35 and kept a Buy rating on the shares. The analyst also lowered his full year 2022 estimates to reflect a quieter trading environment in the interim but continues to see significant account growth ahead.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), Ideanomics (IDEX), Riot Blockchain (RIOT), Pareteum (TEUM) and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin rose roughly 3% this week to $32,461 in U.S. dollars, according to TradeBlock.