PayPal enables business accounts to buy, sell crypto as analyst initiates CleanSpark with Outperform 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.
BITFARMS, RIOT ENTER SETTLEMENT AGREEMENT: Bitfarms (BITF) and Riot Platforms (RIOT) announced Monday that they have entered into a settlement agreement in advance of the Special Meeting of Bitfarms Shareholders currently scheduled for November 6. Under the terms of the agreement: Andrés Finkielsztain has stepped down from Bitfarms' Board of Directors. Bitfarms has appointed Amy Freedman to its Board and the Governance and Nominating Committee and Compensation Committee of the Board. Riot has agreed to withdraw its June 24 requisition, as amended, and to accept customary standstill provisions through the Bitfarms 2026 Annual Meeting, with certain exceptions. At the Special Meeting, shareholders will be asked to approve an expansion of the Board from five members to six members, to elect an independent director nominated by the Board to serve as the sixth member, and to ratify the company's July 24 shareholder rights plan. Riot has agreed to vote in favor of these matters. The company has provided Riot with certain rights to purchase shares of the company provided Riot holds 15% or more of the outstanding common shares of the company. As a result of the agreement to nominate an additional director for election at the Special Meeting, the Special Meeting may be delayed, but in no event will it be held later than November 20.
Brian Howlett, Independent Chairman of the Board, said, "The Bitfarms Board is committed to effectively overseeing the execution of the company's strategic plan as we work to position Bitfarms to capitalize on the opportunities ahead. Additionally, we recognize the importance of refreshment and having the right mix of skills, experience and diversity, and we are always open to adding qualified candidates with valuable insights and perspectives to strengthen our Board. We are pleased to reach this agreement with Riot, which we believe is in the best interests of all Bitfarms shareholders."
H.C. Wainwright reiterated a Buy rating on Bitfarms with a $4 price target after the company and Riot entered into an agreement that effectively ends Riot's hostile takeover attempt of Bitfarms. The news "lifts an important overhang" on Bitfarms shares and is constructive for both companies, as Bitfarms and Riot "will now avoid what would've been a costly and time-consuming proxy battle in the coming months," the analyst said. The firm believes Bitfarms shares remain "significantly undervalued" at current levels, trading at 40% discount to peers on 2024 estimates revenue.
Additionally on Tuesday, Macquarie initiated coverage of Riot with an Outperform rating and $15 price target. Riot continues to "drive massive scale" as a pure-play, vertically integrated bitcoin miner, managing infrastructure, power, computing, and cooling technology. Riot's sites are some of the most scaled, yielding operational efficiencies once fully built out, while advancing bespoke cooling infrastructure, the analyst said.
PAYPAL ENABLES BUSINESS ACCOUNTS TO BUY, SELL CRYPTO: PayPal (PYPL) announced Wednesday it is enabling its U.S. merchants to buy, hold and sell cryptocurrency directly from their PayPal business account. At launch, this functionality for Business Accounts will not be available in New York State. The announcement is PayPal's latest step to increase cryptocurrency's utility by making increased functionality available to millions of merchants in the U.S. Additionally, PayPal is enabling U.S. merchants to externally transfer cryptocurrency on chain to third-party eligible wallets. PayPal business account holders can now send and receive supported cryptocurrency tokens to and from external blockchain addresses.
"Since we launched the ability for PayPal and Venmo consumers to buy, sell, and hold cryptocurrency in their wallets, we have learned a lot about how they want to use their cryptocurrency," said Jose Fernandez da Ponte, Senior Vice President of Blockchain, Cryptocurrency, and Digital Currencies, PayPal. "Business owners have increasingly expressed a desire for the same cryptocurrency capabilities available to consumers. We're excited to meet that demand by delivering this new offering, empowering them to engage with digital currencies effortlessly."
ANALYST CALLS CLEANSPARK A 'MUST-OWN MINING STOCK': H.C. Wainwright said Tuesday a fireside chat with management showcased why CleanSpark (CLSK) is a "must-own mining stock heading into the next stage of this cycle." CleanSpark has been able to outgrow its peers over the past couple of years to become the second-largest public miner by deployed capacity, the analyst said. H.C. Wainwright added management sees several near-term positive catalysts for bitcoin and the mining sector starting in Q4, including the upcoming election in November. The company expects bitcoin to reach $185,000 this cycle, which would represent a three-times increase from current levels. The discussion further solidified the firm's view that CleanSpark is the best story in the bitcoin mining industry. It believes the shares will outperform both the group and bitcoin over the twelve months. Wainwright reiterated a Buy rating on the shares with a $27 price target.
Additionally, Macquarie initiated coverage of CleanSpark with an Outperform rating and $20 price target. CleanSpark continues to acquire smaller miners opportunistically, while holding on to its sustainability ethos and upscaling tucked-in sites, the analyst said. The firm likes the company's "differentiated attributes," including geography, acquisition strategy, and sustainability.
ROBINHOOD, REVOLUT REPORTEDLY MULL STABLECOIN LAUNCH: Robinhood Markets (HOOD) and Revolut are evaluating launching stablecoins in a bet that stricter regulations in Europe and elsewhere will loosen Tether's hold on the sector, Bloomberg's Olga Kharif, Emily Nicolle and Paige Smith reported Thursday. A Robinhood spokesperson told Bloomberg it has "no imminent plans to launch this offering", while a Revolut spokesperson said the company plans to "further grow" its crypto product suite, without confirming a future stablecoin.
On Friday, Citi raised the firm's price target on Robinhood to $23 from $19 and kept a Neutral rating on the shares as part of a Q3 preview for the brokers and asset managers. The outlook across the brokerage space has been "tilting negative" driven by lower rate expectations for mostly asset sensitive plays and lingering concerns around sweep deposit pricing, the analyst said. The firm cut earnings estimates by an average of 6% and 7% for the brokers in 2025 and 2026, respectively, excluding Robinhood, which saw positive revisions. Citi increased estimates for Robinhood citing strong net deposit trends and trading activity in recent periods. It is "becoming incrementally more constructive" on the name given improving fundamentals, but also sees near-term risks from the potential for lower trading activity and has longer-term questions around the sustainability of organic growth.
MICROSTRATEGY PRICE TARGET RAISES: On Monday, TD Cowen raised the firm's price target on MicroStrategy (MSTR) to $200 from $195 and kept a Buy rating on the shares. The firm noted last week's successful debt transactions where MicroStrategy acquired 7,420 bitcoins for $458M while significantly lowering its interest burden.
Additionally on Sunday, Barclays raised the firm's price target on MicroStrategy to $173 from $146 and kept an Overweight rating on the shares. Given the company's move to un-encumber 70,000 bitcoins, the entirety of the its bitcoin holdings are now unlocked, which will allow MicroStrategy to be more aggressive in its bitcoin accumulation strategy, the analyst said. The firm believes MicroStrategy is in a "comfortable position to further accelerate BTC yield and build up the company's war chest."
CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital (BTBT), Coinbase (COIN), Core Scientific (CORZ), Greenidge Generation (GREE), Mara Holdings (MARA), MicroStrategy, Riot Platforms, Stronghold Digital Mining (SDIG) and TeraWulf (WULF).
PRICE ACTION: As of time of writing, bitcoin rose about 4% this week to $65,438 in U.S. dollars, according to CoinDesk.
