Here’s What You Missed in Crypto This Week

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 DISALBED INDIA SIGN-UPS: Coinbase (COIN) disabled sign-ups in India in June but remains committed to the country, after emailing users about ceasing operations on September 25, TechCrunch’s Manish Singh reported. “We stopped allowing new user sign-ups on our exchange product in India back in June of this year. We maintain a robust tech hub in the country and offer live products, including our Coinbase Wallet. We are committed to India over the long term and continue to explore ways to strengthen our presence in this important market,” a Coinbase spokesperson told TechCrunch in an email.

MIZUHO SEES ‘REALITY CHECK’ FOR COINBASE: Meanwhile, Mizuho earlier this week said that beginning in Q1 of 2023, there is a “stark bifurcation” between Coinbase volumes and the price of bitcoin. The firm believes this indicates “potential fatigue” among retail customers. “FOMO no longer entices investors to trade Bitcoin when prices rise the way it did in prior years,” the analyst told investors in a research note. Mizuho believes this could prove problematic for Coinbase, as it generates 95% of its transaction revenue from retail trades. It worries that the year-to-date rise in Coinbase’ stock is unsustainable. Mizuho expects a “reality check to follow” and maintained an Underperform rating on the shares with a $27 price target.

RIOT CALLS CNBC HEADLINE ‘SENSATIONAL’: Late last week, Riot Platforms (RIOT) issued a statement in response to recent inquiries regarding its power strategy following its August monthly operations update. “In particular, on September 6, 2023, CNBC published a story titled Texas paid bitcoin miner Riot $31.7 million to shut down during heat wave in August,” the company said. “Unfortunately, this sensational and inaccurate headline has caused confusion, which we would like to dispel. In August, Riot provided over 84,000 megawatt hours of energy to the market in Texas to reduce overall demand, lower consumer prices, and stabilize the grid during a heat wave. This ensured that consumers did not experience disruptions during extreme temperatures. Riot earned approximately $7M from the Electric Reliability Council of Texas ancillary services program.”

“ERCOT is a membership-based independent system operator, which operates about ninety percent of the electric grid in Texas, helping to deliver power to 25 million customers across a geographic area larger than most countries,” the statement continued. “ERCOT’s primary responsibilities are to maintain system reliability, facilitate competitive wholesale and retail energy markets, and to ensure open access to power transmission. The ancillary services program is a competitive bidding process in which certain large customers in ERCOT’s market bid for the grid operator to pay them a fee that is similar to an insurance premium, which then affords ERCOT the right to control the customer’s electrical load to ensure grid stability. Riot’s premium amounts to less than one percent of the program, which administered nearly $1B during this time period. Riot also sold approximately $24M of pre-purchased energy to its energy provider, TXU, pursuant to its long-term power purchase agreements. TXU is a retail electricity provider and subsidiary of Vistra Corp., which is a publicly traded enterprise valued at over $12B. When economically efficient to do so, Riot does not use the energy it has purchased for business operations and instead sells it back to TXU in exchange for credits to apply to future energy bills.”

BTIG STARTS CIPHER MINING AT BUY: BTIG initiated coverage of Cipher Mining (CIFR) with a Buy rating and $6 price target. Cipher is an industrial-scale bitcoin miner with a “very low-cost fixed-price” power purchase agreement with the ability to opportunistically sell electricity back to the grid, the analyst tells investors in a research note. The firm says Cipher has one of the lowest cost structures in the bitcoin mining industry, creating attractive unit economics allowing the business to operate through the cycle.

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

PRICE ACTION: As of time of writing, bitcoin rose just under 2% this week at $26,319 in U.S. dollars, according to CoinDesk.