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.
CLEANSPARK TO ACQUIRE MAWSON FACILITY: CleanSpark (CLSK) announced Friday it has entered into definitive agreements with Mawson Infrastructure Group (MIGI) to acquire Mawson's turnkey bitcoin mining facility in Sandersville, Georgia, for up to $33M. The transaction is expected to add 1.4 exahashes per second to CleanSpark's hashrate before year-end, 2.4 EH/s in early 2023 and 7.0 EH/s by the end of 2023. This capacity supports CleanSpark's target of over 22 EH/s by the end of 2023. CleanSpark has also agreed to purchase from Mawson 6,468 of the latest generation mining ASICs for approximately $9.5M in cash, at a cost of $17 per terahash. These machines, already operating at the acquired site, will add over 558 petahashes per second of computing power immediately upon closing. Under the terms of the agreements for the facility and miners, Mawson will receive consideration of approximately $26.5M in cash at closing; up to $11M in CleanSpark stock, $6.5M which is issuable at closing and the remaining $4.5M of which is subject to reaching certain earn-out commitments; $3M in seller financing in the form of promissory notes; and, an additional $2M in a seller-financed earn-out payable at least 60 days post-closing upon certain conditions being met. The maximum total purchase price for the facility and miners is $42.5M. As part of the agreement, CleanSpark will provide up to 30 MW of temporary hosting capacity, for up to 180 days, while Mawson transfers miners to its Pennsylvania operations. This process is slated to begin in early 2023.
The company also announced Wednesday it entered into a purchase agreement with Cryptech Solutions for 10,000 brand-new Bitmain Antminer S19j Pro units for a total price of $28M, after credits and discounts. The servers are expected to be delivered to CleanSpark's facilities by late October or early November of this year.
BITNILE ANNOUNCES PLANNED SPINOFFS: BitNile Holdings (NILE) announced Friday plans that will upon completion result in its having separated into four public companies. TurnOnGreen, an electric vehicle charging and power solutions company, became a publicly traded company on September 6, pursuant to its acquisition by Imperalis Holding, a publicly traded subsidiary of BitNilem that intends to change its name to TurnOnGreen. Gresham Worldwide, a global provider of electronic solutions to militaries and defense companies, became a publicly traded company on September 8, pursuant to closing of a share exchange agreement with Giga-tronics (GIGA). Ault Alliance, a diversified holding company focused on bitcoin mining, data center operations, commercial lending, activist investing, oil exploration, hotel operations and other commercial real estate holdings, is intended to become a public reporting company in the first half of 2023. BitNile will after the planned spin-offs retain sufficient capital to continue development of a new bitcoin marketplace platform. The spin-offs will upon completion result in the distribution of substantially all of the company's nearly $600M assets to its shareholders, who will become owners of four public companies.
Additionally on Wednesday, BitNile entered into a contract with Bitmain Technologies, to purchase an additional 1,325 S19j Pro Antminers that feature a processing power of 100 TH/s. With this new contract, BNI has agreed to purchase a total of 21,925 bitcoin miners.
COINBASE FUNDS SUIT CHALLENGING TREASURY SANCTIONS: Coinbase (COIN) said Thursday it is funding a lawsuit brought by six people challenging the U.S. Treasury Department's sanctions of the Tornado Cash smart contracts and is asking the court to remove them from the U.S. sanctions list. "The sanctions exceed Treasury's authority, harm innocent people, remove privacy and security options for crypto users, and stifle innovation," Coinbase CEO Brian Armstrong wrote in a blog post. Tornado Cash is an open source piece of software running on the Ethereum blockchain that "preserves privacy by allowing users to deposit assets from one crypto address and withdraw them using a different crypto address," the company said. "We have no issue with the Treasury sanctioning bad actors and we take a hard stance against unlawful behavior. But in this case, Treasury went much further and took the unprecedented step of sanctioning an entire technology instead of specific individuals," it added.
Additionally on Thursday, Enthusiast Gaming (EGLX) announced a collaboration with Coinbase. Coinbase will be the preferred infrastructure provider to power Enthusiast Gaming's portfolio of Web3-enabled games. Coinbase will provide developer tools, educational content, and community-building support to power Enthusiast Gaming's portfolio of Web3-enabled games.
Meanwhile, Daiwa analyst Carlton Lai upgraded Coinbase to Buy from Outperform on Friday with an unchanged price target of $100 following the retracement in share price over the past month. After "years of delay," the Ethereum Merge, which he deems "one of the crypto industry's biggest events this year," is scheduled to take place during the period of September 13-15, Lai said. He believes Coinbase holds close to 15% of all circulating Ethereum on its platform, making it one of the largest holders of Ethereum globally and a "key beneficiary" of increased Ethereum staking demand post-Merge, Lai said. He projects $554M in total staking revenue for Coinbase in 2023, which would be up 73% year-over-year. On Wednesday, Barclays analyst Benjamin Budish lowered the firm's price target on Coinbase to $73 from $80 and keot an Equal Weight rating on the shares following a "deep dive" on the upcoming Ethereum Merge. The analyst's base case indicates the impact is largely already priced into Coinbase shares, but he thinks a scenario is possible with "materially more meaningful upside if asset prices and engagement increase."
SEC CHAIRMAN SUPPORTS CFTC OVERSIGHT OF BITCOIN: Gary Gensler, the Securities and Exchange Commission Chairman, has signaled that he would support Congress giving the Commodity Futures Trading Commission additional power to oversee certain cryptocurrencies such as bitcoin, The Wall Street Journal's Andrew Ackerman reported Thursday, citing comments Gensler made at an industry conference. Gensler, who headed the CFTC from 2009 to 2014, said the agency needs greater authority to regulate “nonsecurity tokens…and related intermediaries,” adding he would welcome working with lawmakers as long as it doesn't take away power from the SEC.
GAMESTOP PARTNERS WITH FTX: GameStop (GME) announced Wednesday that it has entered into a partnership with FTX US. The partnership is intended to introduce more GameStop customers to FTX's community and its marketplaces for digital assets. In addition to collaborating with FTX on new ecommerce and online marketing initiatives, GameStop will begin carrying FTX gift cards in select stores. During the term of the partnership, GameStop will be FTX's preferred retail partner in the United States. The financial terms of the partnership are not being disclosed.
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 Blockchain (RIOT), Overstock (OSTK), 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 about 6% this week to $21,090 in U.S. dollars, according to TradeBlock.
