Public Keys: Mining Sickness, Miss Coinbase, and Hey, Who's New?
Public Keys is a weekly report from Decrypt that examines the top publicly traded crypto companies. This week: Bitcoin miners struggle, Coinbase tries to create some confusion ahead of its profit cut, and sources say Meta is interested in stablecoins .
Bitcoin Miners' Difficulties
It's been a dark few days for public Bitcoin miners this week.
A shortage of BTC supplies prevented MARA Holdings, whose shares are listed on the Nasdaq under the ticker MARA, from avoiding a disappointing quarterly report on Thursday.
Recall that on March 31, when Bitcoin was trading at around $83,000, the company announced a $2 billion stock offering to raise capital for “general corporate purposes, including Bitcoin acquisitions and working capital.” The company is no stranger to acquiring Bitcoin on the public market.
Whatever benefit it gains from buying BTC with the latest offering will be the basis for its second-quarter earnings. Yesterday, the company reported a $533 million loss for the first quarter, largely due to the need to adjust the valuation of bitcoin on its balance sheet.
But here's the truly alarming part: mining volumes have fallen by 19%, even though the Florida-based company doubled its capacity after the Bitcoin network halving in 2024.
Quick update: The Bitcoin network has already experienced four halving events, which cut the reward paid to Bitcoin miners in half. Last year, the reward dropped to 3.125 BTC.
That doesn’t mean investors are running for the exits, however. MARA opened Friday at $15.16, up 6% from yesterday’s close. And while MARA was buying bitcoin in the first quarter, its rival Riot Platforms shorted every other publicly traded miner, selling 475 bitcoin in April for a then-$38.8 million value.
Time to mothball your mining rigs? No, not all of them, according to investment bank Benchmark. On Tuesday, the bank’s analysts set a five-times-higher price target of $3 and a “buy” rating for Canaan, which trades on the Nasdaq under the ticker CAN.
Equity research analyst Mark Palmer thinks Canaan's North American expansion will help lift its shares. But hours before the close of trading on Friday, they were down 5.87% for the week, trading at $0.75.
Deja vu for Meta
A new company may join the public key cohort in the near future.
Meta, which trades on the Nasdaq under the ticker META, is reluctant to announce anything official, but five unnamed sources told Fortune that parent company Facebook is exploring the possibility of using stablecoins to reward content creators on its platforms.
One crypto executive who spoke to the magazine suggested that Instagram subsidiary Meta could use stablecoins to lower fees for small payments of $100 or less to content creators. The executives who shared this information with Fortune were cautious, emphasizing that the company is still in the learning stage and that implementation could take a long time.
If this sounds familiar, it’s because the company tried to launch its own stablecoin, Diem, in 2019, but ran into regulatory trouble and abandoned the project in 2022, selling its assets to the now-defunct crypto bank Silvergate.
Still, shareholders may want Meta to shed one of its failed experiments before it embarks on a new one. Analysts are calling for the company to abandon its Reality Labs project, which is responsible for the Quest VR headset, augmented reality sunglasses, and the metaverse game Horizon Worlds.
Forrester analyst Mike Proulx called Reality Labs a “leaky bucket” after the company's first-quarter report showed the unit lost $4.2 billion in the first quarter, bringing its total losses to $60 billion.
Coinbase Is Losing Profits – Look There!
It may just be our opinion, but big announcements before the release of financial results usually mean that the quarter was not very successful.
At least that's what happened with Coinbase this week.
On Wednesday, the company released the materials of its Freedom of Information Act (FOIA) request for public records from the SEC, FDIC and other agencies about their investigations into Ethereum and efforts to bust cryptocurrency companies.
Then, on Thursday, the company started the day by touting its nearly $3 billion acquisition of cryptocurrency derivatives exchange Deribit. However, the company's earnings report after going public showed that it was facing a major slowdown in retail trading volume.
This is not surprising. Global markets have been under pressure from volatile trade negotiations – or lack thereof – for months.
CEO Brian Armstrong has said he still wants USDC to become the largest U.S. dollar-backed stablecoin in the next few years. That’s not just empty praise. USDC is still a significant source of revenue for Coinbase.
The exchange's deal with Circle, in which interest earned on US tokens
Source: cryptonews.net
