Crypto Currents: Activist investor Starboard takes stake in Riot

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.

ACTIVIST INVESTOR TAKES STAKE IN RIOT: Activist investor Starboard Value has built a “significant position” in Riot Platforms (RIOT) and is pushing for changes at the bitcoin-mining operator, The Wall Street Journal’s Lauren Thomas and Ben Glickman reported Thursday, citing people familiar with the matter. The exact size of Starboard’s position couldn’t be learned, but Starboard has been in discussions with Riot’s management team to push the company to convert some of its bitcoin-mining facilities into capacity for large data-center users, the sources said.

Meanwhile on Thursday, JonesResearch initiated coverage of Riot Platforms with a Hold rating. The firm also initiated coverage of IREN (IREN) with a Buy rating and $22 price target as well as Hut 8 (HUT) with a Buy rating and $36 price target. JonesResearch also initiated coverage of Mara Holdings (MARA) with a Hold rating, CleanSpark (CLSK) with a Hold rating and Core Scientific (CORZ) with a Hold rating.

Additionally on Tuesday, JPMorgan raised the firm’s price target on Riot Platforms to $16 from $9.50 and kept an Overweight rating on the shares. The firm updated its bitcoin miner price targets and models to reflect the Q3 results and increases in bitcoin price and the network hashrate. JPMorgan also downgraded IREN on Tuesday to Neutral from Overweight with a price target of $15, up from $9.50. The firm said that while IREN was its top pick entering 2024, with the shares up over 100% year-to-date, it is time to move to the sidelines. JPMorgan continues to like IREN’s “industry leading” fleet efficiency, power costs and uptime, but views the company’s cloud compute business as a “wild card today,” and thinks other operators offer better value at current levels.

The firm also upgraded Mara Holdings to Neutral from Underweight with a price target of $23, up from $12. Mara has acquired 800 MW of self-mining capacity over the last 12 months, and today only trails Riot in terms of owned active power capacity, “which is impressive and goes a long way towards improving the company’s mining economics,” the analyst said. JPMorgan also upgraded CleanSpark to Overweight from Neutral with a price target of $17, up from $10.50. CleanSpark shares have declined around 1% over the past month versus a 24% increase in bitcoin price and 15% increase in the aggregate market cap of the bitcoin mining coverage universe, “which feels overly punitive,” the analyst said.

Additionally on Wednesday, Roth MKM raised the firm’s price target on IREN to $25 from $20 and kept a Buy rating on the shares following the company’s November update. IREN’s hash rate expanded 33% to 28 EH/s and 31 EH/s in the coming weeks, and while a possible Bitmain ban could be a hiccup, the scale and relationships IREN has likely enable the company to seek other suppliers to fulfill the needed 19 EH/s to avoid energization delay, the analyst said.

MICROSTRATEGY BUYS MORE BITCOIN: In a Monday regulatory filing, MicroStrategy (MSTR) disclosed that, during the period between December 2 and December 8, it had sold an aggregate of 5.42M shares under a sales agreement for aggregate net proceeds to the company of approximately $2.13B. The company also announced that, during the period between December 2 and December 8, it acquired approximately 21,550 bitcoins for approximately $2.1B in cash, at an average price of approximately $98,783 per bitcoin. The bitcoin purchases were made using proceeds from the issuance and sale of shares under the sales agreement. As of December 8, the company, together with its subsidiaries, held an aggregate of approximately 423,650 bitcoins, which were acquired at an aggregate purchase price of approximately $25.6B and an average purchase price of approximately $60,324 per bitcoin.

Additionally on Thursday, Bernstein said that Bloomberg Intelligence reported a potential entry for MicroStrategy in the Nasdaq100. This would lead to the inclusion of MicroStrategy in some of the largest ETFs such as QQQ. The stock trades at a 147% premium to its Bitcoin NAV. While many investors may have reservations on its premium to NAV valuation and its bitcoin purchase program dependent on its ability to issue equity and debt convertible at this premium, Bernstein believes, given the bitcoin and crypto friendly regulatory environment, this can go on for a long time–at least all of 2025. With potential inclusion in Nasdaq100 and QQQ, the firm expects more visibility and recognition beyond fresh ETF inflows. Bernstein has an Outperform rating on the shares with a price target of $600.

AGM GROUP TO BUY MINING EQUIPMENT FROM CANAAN: Canaan (CAN) announced Thursday that Canaan Creative Global has entered into a purchase agreement with AGM Group Holdings (AGMH) for its Avalon A15 HydU 370T mining machines. As part of the agreement, Canaan will initially provide 2,000 bitcoin mining machines to AGMH. The company has also agreed to provide its customer with an option to acquire approximately 30,000 additional BTC mining units, potentially providing AGMH with a combined power capacity not exceeding 300 megawatts.

MICROSOFT INVESTORS REJECT BITCOIN PROPOSAL: Microsoft (MSFT) investors on Tuesday (AMZN) and may do the same with other corporations, according to Ethan Peck, deputy director of the shareholder activist group. Microsoft’s board had come out earlier against the proposal, saying it evaluates cryptocurrencies already, with proxy advisory firms Glass Lewis and ISS concurring.

COINBASE PRICE TARGET RAISE: On Monday, Barclays raised the firm’s price target on Coinbase (COIN) to $355 from $204 and kept an Equal Weight rating on the shares. The macro backdrop looks constructive going into 2025 for the brokers, asset managers and exchanges, the analyst said. The firm is increasingly constructive on the alternative asset managers, where an “unleash” of transacting has been growing and looks set to happen, and brokers, where it sees healthy earnings growth opportunities.

Meanwhile, Needham raised the firm’s price target on Coinbase to $420 from $375 and kept a Buy rating on the shares. Retail activity is coming back significantly to the crypto market, with December volumes for Coinbase on track for their best month ever, the analyst said. Volatility has also remained elevated since the election, with bitcoin hovering around the key psychological level of $100K, contributing to high volumes, Needham added.

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital (BTBT), Coinbase, Core Scientific, Greenidge Generation (GREE), Mara Holdings, MicroStrategy, Riot Platforms, Stronghold Digital Mining (SDIG) and TeraWulf (WULF).

PRICE ACTION: As of time of writing, bitcoin rose about 1% this week to $100,540 in U.S. dollars, according to CoinDesk.