Coinbase investing 10% of profits in crypto as Facebook’s Novi digital wallet ready to come to market
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 TO INVEST 10% OF PROFITS IN CRYPTO: Coinbase (COIN) CEO Brian Armstrong tweeted Thursday: “We recently received board approval to purchase over $500M of crypto on our balance sheet to add to our existing holdings. And we’ll be investing 10% of all profit going forward in crypto. I expect this percentage to keep growing over time as the cryptoeconomy matures.”
The news comes after Mizuho analyst Dan Dolev raised the firm’s price target on Coinbase on Wednesday to $220 from $210 and kept a Neutral rating on the shares. The stock is up “amid the mini Bitcoin rally” but there are “three signs that should tame some enthusiasm,” Dolev said. Coinbase may have ceded some bitcoin market share in Q2, retail users traded less in Q2, and institutional yield continued to fall in Q2, potentially foreshadowing the future of crypto fee compression, the analyst said. Dolev remains cautious on Coinbase shares.
FACEBOOK’S NOVI READY TO COME TO MARKET: In a Wednesday blog post, David Marcus, head of Facebook’s (FB) financial unit, wrote, “After we announced Libra, we publicly committed that we would not launch Novi on Libra, now Diem, without the necessary regulatory approvals, and that we would engage with regulators, policy makers, and experts as we developed our product. We have stayed true to these commitments and engaged in constructive consultations with regulators and policy makers around the world. In the US, we have secured licenses or approvals for Novi in nearly every state, and we will not launch anywhere we have not yet received such clearances. The Diem Association has become an independent entity, conducting its own dialogue with US and global regulators. It has addressed every legitimate concern that was raised on its journey to design and build a high quality stablecoin with extensive consumer protections, and a highly compliant payments network to support it — all within the US regulatory perimeter. Nonetheless, along this journey, I’ve repeatedly heard variations of the argument that the payments and financial services industry shouldn’t let Facebook be part of these innovations. I’ve heard multiple conversations about how this proposal would be so great if only Facebook wasn’t involved… I do believe we deserve a fair shot. We can and should play a key role in improving the unacceptable state of affairs that persists for too many people, and the American way to do it is to enable more competition and innovation to break the stalemate of decades of stagnation…Change is long overdue. It’ll happen one way or another. Novi is ready to come to market. It’s regulated, and we’re confident in our operational ability to exceed the high standards of compliance that will be demanded of us.”
CLEANSPARK REPORTS Q3 EARNINGS: On Tuesday, CleanSpark (CLSK) reported Q3 non-GAAP earnings per share of 7c on revenue of $11.9M, which compared to analyst estimates of 7c and $15.2M, respectively. The company produced more than 191 bitcoins in the quarter and has produced an aggregate of 598 bitcoins since acquiring its mining operations on December 10, 2021 through August 14, 2021. The company said, “Current hashrate capacity now exceeds 820 PH/s, which is nearly double the capacity just 46 days ago. The Company anticipates achieving 1.0 EH/s in production capacity within the coming month when the balance of the mining rigs scheduled to be hashing in August are installed. To put this in perspective, the Company produced just over 3 BTC on June 30. It is now capable of producing between 6 and 7 Bitcoin per day. At current difficulty rates, 1.0 EH/s would result in approximately 8-9 bitcoins per day, which would result in $376,000 to $423,000 per day, or $137M-$154M, in annualized revenue, using a bitcoin price of $47,000.”
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