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 LAUNCHES NATIONAL AD CAMPAIGN: Coinbase (COIN) announced Monday that it is launching Crypto: Moving America Forward, “a national campaign to explain crypto's critical role as an underlying technology that will update the global financial system.” The company added, “With China embracing and advancing the use of technology, including digital assets, to project power, Crypto: Moving America Forward will also make clear that US global economic leadership and national security are at risk if the US cedes its role in building technology that will be central to the world's financial infrastructure." Coinbase's campaign begins with a series of four ads featuring CEO Brian Armstrong, stating that, "These ads will air on popular Sunday shows, with a new chapter premiering each weekend. Together, they will explain why crypto matters and what is at stake for the United States."
US BITCOIN CORP TO MANAGE RESTRUCTURED MINING DIVISION OF CELSIUS: US Data Mining Group dba US Bitcoin Corp announced Thursday that it has been selected after multiple rounds of bidding in a competitive auction process to manage the restructured mining division of Celsius Network, which filed for Chapter 11 bankruptcy protection in July. USBTC, which announced an all-stock merger of equals with Hut 8 (HUT) in February, submitted the winning bid as part of the Fahrenheit coalition. The coalition includes USBTC, Arrington Capital, Proof Group Capital Management, Steven Kokinos and Ravi Kaza. Upon restructuring, Fahrenheit will serve as the management company of the broader Celsius entity. Fahrenheit will receive a management fee of $20M per year as part of a five-year agreement with Celsius. Under the proposed restructuring, USBTC will enter into one or more operating and services agreements with the restructured company to become the exclusive operator of all mining assets formerly owned by Celsius. In addition to a portion of the management fee, USBTC will also receive from Fahrenheit a fee of $15M per year net of operating expenses to manage the mining division of the restructured company. USBTC expects to increase its total installed hashrate under management by approximately 12.2 EH/s upon full energization of the Celsius fleet of 121,800 machines. The consummation of Celsius’ restructuring transaction is subject to approval of the Bankruptcy Court.
AULT’S BITNILE DEPLOYS 9,000 MINERS IN MICHIGAN: Ault Alliance (AULT) announced Wednesday that its wholly owned subsidiary, BitNile, has deployed and energized approximately 9,000 of its bitcoin miners at its Michigan data center. The company also announced that BNI has completed its full deployment and energization of 10,000 bitcoin miners that are being hosted through its strategic collaboration with Core Scientific (CORZ). Milton Ault III, executive chairman of Ault Alliance, said, “Leveraging the impressive power capacity of our Michigan data center with 28 megawatts, along with Core Scientific’s 30 MW, we have secured an impressive 58 MW of power capacity, operating approximately 19,000 of our 19,900 miners, which, when fully deployed, will offer a substantial hash rate of 2.2 exahashes per second. Given the prevailing market conditions, which includes a bitcoin trading price of approximately $27,200 and a mining difficulty of 49.55T, our mining operations are projected to generate $56M in annualized revenue. This substantial contribution will play a vital role in reaching our targeted consolidated revenue of $200M for 2023.”
BINANCE REPORTEDLY COMMINGLED CUSTOMER FUNDS, REVENUE: Cryptocurrency exchange Binance commingled customer money with company revenue in 2020 and 2021, violating U.S. financial regulations that mandate customer funds be kept separate, Reuters’ Angus Berwick and Tom Wilson reported Tuesday, citing three sources familiar with the matter. One source claimed the funds ran into billions of dollars and commingling happened almost daily in accounts the exchange held at Silvergate Bank. Three former U.S. regulators told Reuters that the money flows signal a lack of internal controls to ensure customers funds were clearly identifiable and separated from revenues.
DIGITAL CURRENCY GROUP TO SHUTTER TRADEBLOCK: Digital Currency Group, the parent company of CoinDesk, is shuttering its trade execution and prime brokerage services unit TradeBlock, Bloomberg’s Olga Kharif, Anna Irrera and Hannah Miller reported Thursday. The shutdown of the unit, which offers trading services to institutional investors, will be effective as of May 31. "Due to the state of the broader economy and prolonged crypto winter, along with the challenging regulatory environment for digital assets in the U.S., we made the decision to sunset the institutional trading platform side of the business, known as TradeBlock, effective May 31, 2023," a spokesperson said.
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. Ideanomics (IDEX), Riot Platforms (RIOT), Overstock (OSTK), 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 dropped roughly 1% this week to $26,563 in U.S. dollars, according to TradeBlock.