Crypto Currents: Bitfarms assumes control of Sharon, PA data center

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.

BITFARMS ASSUMES CONTROL OF SHARON, PA SITE: Bitfarms (BITF) announced Tuesday it entered into the definitive lease agreement and has assumed control of its newest data center in Sharon, Pennsylvania. This site represents Bitfarms’ first mega-site in the U.S. with access to up to 120 MW. With this transaction, Bitfarms has closed on 110 MW, 30 of which are slated to come online by year-end 2024. Bitfarms has also signed a letter of intent for a lease to an additional 10 MW site, which will bring total site capacity to 120 MW in 2025. “This site increases our U.S. presence nearly sevenfold and kickstarts our aggressive U.S. growth plan,” said Ben Gagnon, Bitfarms CEO. “The Pennsylvania-New Jersey-Maryland grid is the largest wholesale electricity market in the U.S., offering abundant access to competitively priced and flexible power that is attractive for Bitcoin mining, energy trading, and HPC/AI, among other uses. For Bitcoin mining specifically, the site is expected to support up to 8 EH/s+ with the latest generation miners, and there are significant curtailment, demand-response and energy trading opportunities available to effectively hedge our energy costs and bring down the total cost of power.”

Additionally on Monday, B. Riley raised the firm’s price target on Stronghold Digital Mining (SDIG) to $6 from $5 and kept a Neutral rating on the shares. The analyst views the company’s combination with Bitfarms as a positive for both companies. The firm cites the transaction premium for the target increase.

CRYPTO EARNINGS: On Wednesday, IREN (IREN) reported FY24 loss per share of (29c) on a revenue of $188.8M, which compared to loss per share of ($3.14) on revenue of $81.9M for the same period last year. The company reported bitcoin mining revenue of $184.1M, as compared to $75.5M in FY23 with 4,191 bitcoin mined, as compared to 3,259 bitcoin in FY23. “We are pleased to report our full year FY24 results, which highlights continued growth across revenue, earnings and cashflow,” said Daniel Roberts, Co-CEO. “Our 2024 guidance remains unchanged. With 15 EH/s installed, we are well on track to achieve our 20 EH/s milestone next month and 30 EH/s this year.”

On Friday, Compass Point analyst Joe Flynn lowered the firm’s price target on IREN to $16 from $18.50 and kept a Buy rating on the shares. IREN reported fiscal Q4 results below the firm’s estimates, largely due to increased operating expenses and ramp of HPC/AI engineering talent, the analyst said. The firm continues to like IREN given its significant land/power portfolio and HPC optionality, but noted it believes the company is currently early in conversations and cites increased opex and share count estimates for its target cut.

Meanwhile, Macquarie analyst Paul Golding raised the firm’s price target on IREN to $13.50 from $12 and kept an Outperform rating on the shares. Q4 results came in slightly below market expectations on higher network difficulty, but IREN has added about 4.5 EH/s of capacity since its last update, noted the firm, which continues to incorporate the deployment of additional miners on the way along with the AI-fueled HPC business potential in arriving at its estimates and target.

Applied Digital (APLD) also reported earnings on Wednesday, with a Q4 loss per share of (36c) on a revenue of $47.3M, which compared to analyst estimates of a loss per share of (22c) on a revenue of $37.6M. Wes Cummins, CEO, said, “By the end of June, we successfully resolved all transformer issues at our Ellendale Data Center Hosting facility, restoring it to full power capacity. Despite these short-term setbacks, we made significant progress on our key growth initiatives, particularly in expanding our Cloud Services business and executing an LOI with a U.S.-based hyperscaler for 400 MW capacity, which includes our 100 MW facility currently under construction and two future buildings…We are incredibly proud of the progress made this quarter and look forward to providing further updates as we move into fiscal 2025. Looking ahead, we believe fiscal fourth quarter marked the bottom of our revenues and anticipate sequential improvements in the top line as we enter the first quarter of fiscal 2025.”

Following the report, Roth MKM analyst Darren Aftahi lowered the firm’s price target on Applied Digital to $10 from $11 and kept a Buy rating on the shares. The company’s Q4 revenue was in line but it’s larger losses were driven by higher GPU depreciation and High Performance Computing costs, the analyst said. There is some time between when Applied Digital will finish construction of building #1 and when this moves to Ready for Service, though the signing of a formal lease and potential project financing are critical for growth and stock appreciation, the firm added.

Additionally on Wednesday, Argo Blockchain (ARBK) reported 1H24 loss per share of (6c) on a revenue of $29.3M, which compared to a loss per share of (4c) on a revenue of $24M last year. The total number of bitcoin mined during 1H24 was 507, a 46% decrease from 1H23 of 947. This is primarily due to the increase in the global hashrate and the reduction in the bitcoin denominated hash price. The company ended June with $4M of cash and 11 bitcoin equivalent. Thomas Chippas, CEO, said, “Argo’s focus on financial discipline and operational efficiency enabled us to pay off our $35M debt obligation to Galaxy, significantly deleveraging our balance sheet. This positions us well to explore investing in growth and strategic initiatives that can drive long-term value for our shareholders.”

DOGECOIN LAWSUIT AGAINST TESLA DISMISSED: A judge dismissed a lawsuit against Elon Musk and Tesla (TSLA) alleging the CEO pumped up the price of cryptocurrency Dogecoin into a $258B “pyramid scheme”, Bloomberg’s Rachel Graf reported Thursday, citing the ruling. Investors who lost money on the crypto faulted Musk for promoting it on Twitter with statements like “One word: Doge,” and announcing Tesla would accept it as payment, however the judge ruled Musk’s statements were “aspirational” rather than “factual and susceptible to being falsified” and “no reasonable investor could rely upon them.”

NASDAQ FILES TO LIST NASDAQ BITCOIN INDEX OPTIONS: On Tuesday, Nasdaq (NDAQ), in partnership with CF Benchmarks, announced its filing with the Securities and Exchange Commission to list and trade Nasdaq Bitcoin Index Options. Upon regulatory approval, investors will be able to manage positions and hedge investments in cryptocurrency through options, furthering the maturity and liquidity of the asset class. “We are proud to partner with CF Benchmarks for the Nasdaq Bitcoin Index Options, providing market participants with trusted investment avenues for accessing the digital asset ecosystem,” said Greg Ferrari, VP and Head of Exchange Business Management at Nasdaq. “This collaboration further combines the innovative crypto landscape with the resiliency and reliability of traditional securities markets and would mark a significant milestone for expanding the maturation of the digital assets market.” Pending regulatory approval, the index options will track the price of bitcoin as represented by the CME CF Bitcoin Real-Time Index. The product is intended to provide institutional and retail market participants access to an important risk management tool.

CME GROUP TO LAUNCH BITCOIN FRIDAY FUTURES: CME Group (CME) announced Tuesday it will further expand its cryptocurrency derivatives offerings with the introduction of Bitcoin Friday futures on September 30, pending regulatory review. Sized at one-fiftieth of one bitcoin, these new weekly futures contracts will be cash-settled to the CME CF Bitcoin Reference Rate New York Variant at 4:00 p.m. New York time every Friday. A new BFF contract will be listed every Thursday at 6:00 p.m. New York time for a Friday trade date, with market participants able to trade the nearest two Fridays at any given point. A Friday expiry allows these contracts to closely track the spot price of bitcoin, as well as help investors mitigate weekend price moves. “With these weekly expiring smaller-sized contracts, investors of all sizes – from institutions to sophisticated, active retail traders – will be able to more accurately fine-tune their bitcoin exposure on a regulated exchange,” said Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products. “By settling to the BRRNY, the benchmark used by leading spot bitcoin ETFs, traders will also benefit from growing liquidity and the ability to more efficiently capture market moves during U.S. hours.”

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital (BTBT), Coinbase (COIN), Core Scientific (CORZ), Greenidge Generation (GREE), Marathon Digital (MARA), MicroStrategy (MSTR), Riot Platforms (RIOT), Stronghold Digital Mining and TeraWulf (WULF).

PRICE ACTION: As of time of writing, bitcoin dropped about 7% this week to $59,555 in U.S. dollars, according to CoinDesk.