Briefly Detailed
- Bitcoin miner MARA failed to impress with its recent quarterly report. Similarly, Coinbase fell short on earnings expectations.
- Yet there's a silver lining: Meta could potentially re-enter the stablecoin scene.
Explore SCENE
Mining Doldrums, Absent Coinbase Payment, and introductions for the unfamiliar user in the cryptocurrency realm
Public Keys is a weekly roundup from Decrypt that dissects the key publicly traded crypto companies. This week's highlights: Bitcoin miners grapple with melancholy, Coinbase tries a sneaky maneuver prior to its earnings miss, and sources hint at Meta's curiosity regarding stablecoins.
The Bitcoin mining quandary
Public Bitcoin miners have had some less-than-bright days this week.
Despite larding up on BTC, MARA Holdings couldn't escape a disappointing quarterly report last Thursday. Their shares trade on the Nasdaq under the MARA ticker. Remember that at the end of March 31, when Bitcoin was trading for about $83,000, the company announced a $2 billion stock offering to secure funds for "general corporate purposes, including the acquisition of Bitcoin and for working capital." And they've not been shy about buying Bitcoin on the open market.
The company reported a $533 million Q1 loss last week, primarily due to adjusting the valuation of Bitcoin found on their balance sheet. The real kicker? Mining output dropped by 19% despite the Florida company doubling its capacity since the 2024 Bitcoin network's last halving event.
A quick recap: The Bitcoin network has undergone four halving events, which halve the reward granted to miners. In the most recent event, the reward dropped to 3.125 BTC. Investors, however, don't seem to be panicking. MARA opened on Friday at $15.16, forging ahead by 6% after Thursday's close. Despite buying Bitcoin in Q1, MARA's competitor, Riot Platforms, outsold other public miners during April, unloading 475 Bitcoin worth $38.8 million at the time.
Is it time to mothball the mining rigs? Not quite, according to investment bank Benchmark. On Tuesday, the bank's analysts set a 5x price target of $3 and a buy rating for Canaan, which trades on the Nasdaq under the CAN ticker.
A few hours before the market closed on Friday, however, Canaan plummeted 5.87% for the week and traded at $0.75.
Deja Vu for Meta
There might soon be a new player in the Public Keys circle.
Meta (trading on the Nasdaq under the META ticker) prefers to keep tight-lipped about it, but five mysterious sources told Fortune that the Facebook parent company is deliberating the possibility of integrating stablecoins to reward content creators on its platforms.
One of the crypto execs who conversed with the magazine speculated that Meta subsidiary Instagram might use stablecoins to manage lower fees on small payments of $100 or less to content creators. The sources speaking to Fortune were careful to note that any implementation remains a distant future.
If this sounds familiar, it's because the company ventured to introduce its own stablecoin, Diem (originally Libra), in 2019. However, it received a firm slap from regulators and eventually abandoned the project in 2022, selling the assets to the now-defunct crypto-friendly bank Silvergate.
Shareholders might urge Meta to put down one of its failing experiments before picking up a new one. Analysts have often called for the company to drop its Reality Labs project, which is responsible for the Quest VR headset, augmented reality sunglasses, and the Horizon Worlds metaverse game.
Forrester analyst Mike Proulx has referred to Reality Labs as a "leaky bucket" following the company's Q1 earnings report, which revealed the division lost $4.2 billion in Q1, cumulatively totaling $60 billion in losses.
Coinbase swings and misses
Could it just be us, or do eye-catching announcements before earnings usually signal a lackluster performance for the quarter?
On Wednesday, Coinbase disclosed the spoils of its FOIA request, obtaining public records from various regulatory bodies on their investigations into Ethereum and attempts to de-bank crypto firms. Then, on Thursday, the company commenced the day by boasting about its nearly $3 billion acquisition of crypto derivatives exchange Deribit. However, its after-market earnings report revealed a significant slowdown in retail trading volume.
It's no surprise considering the global markets have been caught in a tangled web of fractious trade negotiations for quite some time.
CEO Brian Armstrong still hopes for USDC to become the most popular U.S. dollar-backed stablecoin within a couple of years. It's not solely for accolades. USDC is still a key revenue earner for Coinbase.
The exchange's arrangement with Circle, which splits interest earned on the cash backing USDC tokens, is "indefinitely renewable," CEO Brian Armstrong said on the company's earnings call Thursday.
"Increased USDC balances on our platform result in steady revenue for Coinbase. Base stablecoin balances reached $4 billion in Q1, increasing by 12% from the previous quarter, largely due to USDC," he further added.
Other Highlights
- Treasuries Ahoy: It's a little mundane to simply build up a Bitcoin stockpile these days. To that end, DeFi Development Corp. (formerly Janover) scooped up $11.2 million worth of Solana, and XRP received a $50 million show of affection from Wellgistics Health
- Chatty Strategy: During the Strategy World event this week, Executive Chairman Michael Saylor revealed that AI chatbots have helped the company dream up some of the financial products that fueled their $52 billion Bitcoin fortune. And yes, that's how they came up with their convertible preferred stock products named "Strife" and "Strike"–they were created using AI.
- MARA Holdings, a Bitcoin miner, reported a significant Q1 loss due to the adjustment of Bitcoin valuation on their balance sheet, and mining output dropped by 19% despite increasing capacity.
- Despite the losses, MARA opened on Friday at $15.16, indicating investors aren't panicking. Riot Platforms, a competitor, outsold other public miners in April.
- Benchmark, an investment bank, has set a 5x price target of $3 and a buy rating for Canaan, another public Bitcoin miner.
- Meta, the Facebook parent company, is considering integrating stablecoins to reward content creators on its platforms, similar to their abandoned Diem project in 2022.
- Meta's Reality Labs project, responsible for VR headsets and metaverse games, has been losing billions, leading some analysts to urge the company to drop it.
- Coinbase fell short on earnings expectations, despite announcing a nearly $3 billion acquisition of crypto derivatives exchange Deribit and obtaining public records on Ethereum investigations.
- USDC, the stablecoin of Coinbase, is still a key revenue earner for the exchange, with base stablecoin balances reaching $4 billion in Q1.
- DeFi Development Corp. acquired $11.2 million worth of Solana, while Wellgistics Health invested $50 million in XRP.
- Michael Saylor, Executive Chairman of a company, revealed that AI chatbots have contributed to the financial products that have fueled their $52 billion Bitcoin fortune.
- Cryptocurrency mining, technology, finance, business,Defi wallet, crypto exchange, crypto mining, ethereum, eth, stablecoin, cryptocurrency, ico, crypto wallet, digital asset, metaverse, token, all play significant roles in the current market landscape.
