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.

HUT 8 RESPONDS TO ‘MISLEADING’ SHORT REPORT: Hut 8 (HUT) issued a Wednesday statement regarding a report from an activist short-selling firm, which it said contained false and misleading characterizations about Hut 8’s business. The company said, “Hut 8 has assessed the claims set forth by the authors of the report and believes that the report is filled with inaccuracies, misrepresented data, speculative claims, and unfounded character attacks. The report appears to represent a deliberate attempt to spread misinformation about Hut 8, its operations, finances, management practices, and key executives. The statements made by the short seller expose an inadequate, distorted understanding of the company, its operations, and its key executives. The report appears to have been made to distract from the company’s achievements and progress since closing its merger of equals. The company believes that the report was designed for the sole purpose of negatively impacting Hut 8’s share price for the short seller’s own benefit, at the expense of Hut 8’s shareholders, partners, and employees.” On December 31, 2023, Hut 8 held 9,195 bitcoin in reserve, with an approximate value of $390M, and had North American-wide operations spanning 205,759 miners under management. “Since I joined as CEO more than three years ago, our leadership team and I have worked tirelessly to earn investors’ and analysts’ confidence in our operations, our diversified strategy, and our growth trajectory. We will not be derailed by activists who stand to profit from spreading misinformation and making defamatory character attacks,” said Hut 8 CEO Jaime Leverton. (read more)

Additionally on Friday, Hut 8 announced that Matt Prusak, Chief Commercial Officer, will depart Hut 8 on January 31. As previously disclosed in filings from the Celsius Network bankruptcy proceedings, Prusak will assume a new role as CEO of the new bitcoin mining company being formed upon emergence. (read more)

CORE SCIENTIFIC EMERGES FROM CHAPTER 11 BANKRUPTCY: Core Scientific (CORZ) announced Tuesday it has completed its reorganization pursuant to Chapter 11 of the United States Bankruptcy Code. The company emerged from Chapter 11 with a strengthened balance sheet and commenced the listing of its common stock, tranche 1 warrants and tranche 2 warrants on the Nasdaq Global Select Market under the symbols CORZ, CORZW and CORZZ, respectively, on January 24. “This week marks an important step forward for us as we emerge, re-list and now focus all our energy on the exciting opportunities ahead of us,” said Adam Sullivan, CEO. “Throughout the reorganization process, the company has maintained its position as one of the largest and most consequential bitcoin miners in North America. Now, with a pathway to de-lever our balance sheet, sufficient liquidity and an unmatched team, we are poised to execute our pragmatic growth plan, continue preparing for the coming halving and create value by transforming energy into high value compute for bitcoin mining and other potential applications.” In 2023, Core Scientific produced 13,762 bitcoin from its owned fleet of miners and another 5,512 bitcoin on behalf of its hosting customers, some of which share proceeds with the company. The company is in the process of deploying and energizing approximately 27,000 new Bitmain S19 XP bitcoin miners and expects to deploy approximately 12,000 Bitmain S21 bitcoin miners before mid-year 2024. With 372 megawatts of partially developed infrastructure at its two Texas data centers, the company plans to increase its capacity by more than 50% over the next four years at a much lower cost per megawatt as compared to new construction. (read more)

On Thursday, H.C. Wainwright upgraded Core Scientific to Buy from Neutral with a $5 price target. The company emerged from Chapter 11 bankruptcy and its shares resumed trading after about one year of working through the restructuring process, the analyst said. The firm said Core Scientific’s bitcoin mining and hosting operations continue and now “boast a refined, lighter, and heartier capital structure.” Scale, diverse locations, and tenured experience “squarely place Core in the range of solid bitcoin operators,” H.C. Wainwright said. (read more)

COINBASE UPGRADE: Oppenheimer upgraded Coinbase (COIN) on Friday to Outperform from Perform with a $160 price target. Either Coinbase will prevail in the SEC lawsuit, or the court will dismiss it, the analyst said. The firm also believes the spot bitcoin exchange traded fund is a net positive for the company, its fundamentals are in an upward trajectory, and there are “multiple near- and long-term catalysts” for the shares. With Coinbase down 35% since December 28, the stock’s risk/reward trade-off “could be more attractive,” said the firm. Oppenheimer believes the company “is stronger than many people realize, and the management team is tougher than most investors think.” (read more)

Meanwhile on Tuesday, JPMorgan downgraded Coinbase to Underweight from Neutral with an unchanged price target of $80. The analyst continues to see Coinbase as the dominant U.S. exchange in the crypto ecosystem and a leader in cryptocurrency trading and investing globally. However, the firm thinks the catalyst in bitcoin exchange traded funds that has pushed the ecosystem out of its winter will disappoint market participants. Cryptocurrency prices are already under pressure, with bitcoin falling below $40,000, and there is greater potential for cryptocurrency ETF enthusiasm to “further deflate,” driving with it lower token prices, lower trading volume, and lower ancillary revenue opportunities for firms like Coinbase, the analyst said. JPMorgan sees the potential for 2024 to be a more challenging year for Coinbase shares. (read more)

BITFARMS BUYS LAND IN PARAGUAY: Bitfarms (BITF) announced Wednesday that it had completed the purchase of land for its new 100 MW production facility in Yguazu, Paraguay. “This transaction, an important step in our recently announced transformative fleet upgrade, expands our LATAM portfolio with low-cost renewable hydropower,” said Geoff Morphy, President and CEO. “The newly acquired land is located in the heart of Paraguay near the Itaipú Dam, the third largest hydropower dam in the world with 14 gigawatts of installed capacity. Positioned to benefit from the region’s abundant renewable energy resources, this new facility should be sustainable both economically and environmentally. Once Yguazu comes online, over 85% of our portfolio will be powered by low-cost green energy that promotes environmentally sustainable bitcoin mining. We look forward to starting construction on the Yguazu farm and anticipate completing the facility’s build-out in 2H24. In conjunction with our miner redeployment strategy, the Yguazu project will be designed to help provide sufficient infrastructure to achieve a corporate hashrate of 21 EH/s by year end 2024 should we exercise our recently announced miner purchase order option for additional Bitmain T21 miners.” (read more)

IRIS PROVIDES UPDATE ON 10 EH/S EXPANSION: On Tuesday, Iris Energy (IREN) provided an update on its near-term expansion to 10 EH/s, as part of a pathway to 20 EH/s. The company advised that it has commenced installation of miners for its expansion to 10 EH/s, with operating hashrate increased to 6 EH/s. The remaining 4 EH/s is expected to be commissioned in 1H24. As previously announced, the company has also secured a pathway to 20 EH/s in 2024, following a purchase and fixed price option agreement for an additional 10 EH/s of Bitmain T21 miners. (read more)

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

PRICE ACTION: As of time of writing, bitcoin dropped roughly 1% this week to $41,213 in U.S. dollars, according to CoinDesk.