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.

BITFARMS REJECTS RIOT ACQUISITION PROPOSAL: On Tuesday, Riot Platforms (RIOT) announced that it has made a proposal to the Bitfarms (BITF) Board of Directors to acquire all outstanding shares of Bitfarms at a price of $2.30 per Bitfarms common share. Riot also announced that it has accumulated a 9.25% stake in Bitfarms to become Bitfarms’ largest shareholder. The proposal represented a 24% premium to Bitfarms’ one-month volume-weighted average share price as of May 24. Further, it represented a 20% premium to Bitfarms’ share price on April 19, the last day of trading prior to Riot’s initial proposal. The proposal represented approximately $950M in total equity value. The consideration offered to Bitfarms’ shareholders under the proposal consisted of cash and Riot common stock and would result in Bitfarms’ shareholders owning up to approximately 17% of the combined company. The proposal was originally delivered privately to the Bitfarms Board on April 22. However, the Board rejected it without engaging in substantive dialogue with Riot. Following Bitfarms’ Annual General and Special Meeting, scheduled for May 31, Riot intends to requisition a Special Meeting of Bitfarms’ shareholders to add new, well-qualified and independent directors to the Bitfarms Board. (read more)

Following the news, Roth MKM kept a Buy rating on Riot Platforms with a $20 price target. The deal would help diversify Riot’s power footprint geographically and make it the largest publicly traded miner by the end of 2024 at 52 EH/s and a long-term power capacity of 2.2G, the analyst said. (read more)

Meanwhile, B. Riley said that increased M&A activity is a major positive for the space, adding that it hopes Riot’s move spurs increased activity across the space, which has not engaged in major transactions despite obvious overhead and procurement synergies. B. Riley made no change to its Buy rating or $15 price target on Riot Platforms’ shares. (read more)

Additionally on Tuesday, Riot announced it acquired ownership of 3,002,350 common shares of Bitfarms representing approximately 0.75% of the issued and outstanding Common Shares of the company. Immediately prior to the acquisition, Riot beneficially owned 36,856,350 Common Shares, representing approximately 9.25% of the issued and outstanding Common Shares. Following completion of the acquisition, Riot beneficially owned 39,858,700 Common Shares, representing approximately 10.00% of the issued and outstanding Common Shares. (read more)

On Wednesday, H.C. Wainwright said he believes Riot Platforms’ proposal is unlikely to be successful. The premium is not high enough to compel Bitfarms shareholders to agree to the deal given the “deep valuation discount at which shares currently trade,” the analyst said. The firm kept a Buy rating on Riot with a $17 price target. (read more)

Also on Wednesday, Bitfarms confirmed that the company received the Riot proposal. The company said, “A Special Committee of the Board comprised solely of independent directors carefully considered the proposal and determined it significantly undervalues the company and its growth prospects. In order to advance discussions with Riot in a meaningful manner, the Special Committee requested customary confidentiality and non-solicitation protections to which Riot did not respond. Having received additional unsolicited expressions of interest, with each additional party executing a customary Non-Disclosure Agreement, the Special Committee is conducting a thorough strategic alternatives review to ensure it achieves maximum shareholder value. These alternatives could include, among others, continuing to execute on the company’s business plan, a strategic business combination or other strategic transaction, or a sale of the company.” (read more)

Following the news, Stifel downgraded Bitfarms to Hold from Buy with a price target of $2.30, down from $3.25. Bitfarms may receive competing bids, but there is now a high possibility that peers will be hesitant to come in given Riot’s current 10% ownership, the analyst said. (read more)

On Friday, B. Riley lowered the firm’s price target on Riot to $13 from $15 and kept a Buy rating on the shares. With current bitcoin pricing, less efficient miners remain profitable, the analyst said. The firm cited higher global network hash rate assumptions for the target change. (read more)

NYSE PARTNERS WITH COINDESK INDICES: The New York Stock Exchange, part of Intercontinental Exchange (ICE), announced Wednesday it is collaborating with CoinDesk Indices to launch cash-settled index options tracking the CoinDesk Bitcoin Price Index, a spot bitcoin index. ICE and the NYSE intend to work with CoinDesk Indices and the relevant regulatory agencies to develop specific product offerings. Last year, ICE Futures Singapore collaborated with CoinDesk Indices to update its bitcoin futures contracts, CoinDesk Bitcoin Futures, to utilize XBX for its monthly contract settlement. Currently the benchmark for $20B in ETF assets under management, XBX tracks the spot price of bitcoin, denominated in U.S. dollars, in real time across multiple crypto exchanges. “As traditional institutions and everyday investors are demonstrating their wide-ranging enthusiasm for the recent approval of spot bitcoin ETFs, the New York Stock Exchange is excited to announce its collaboration with CoinDesk Indices,” said Jon Herrick, chief product officer of NYSE. “Upon regulatory approval, these options contracts will offer investors access to an important liquid and transparent risk-management tool.” (read more)

MICROSTRATEGY PRICE TARGET RAISE: Canaccord raised the firm’s price target on MicroStrategy (MSTR) on Wednesday to $2,047 from $1,590 and kept a Buy rating on the shares. The firm noted the company’s equity premium to its HODL value has remained resilient, hovering at approximately 100% according to their calculations and despite macro fluctuations. Canaccord views this as indicative of true investor appreciation for the accretive bitcoin acquisition model the company has put in place. (read more)

CORE SCIENTIFIC UPGRADE: On Wednesday, BTIG upgraded Core Scientific (CORZ) to Buy from Neutral with an $8 price target. The firm cited the company’s continued execution and its expectation of a firming bitcoin price for the upgrade. The latter should allow Core Scientific to aggressively deleverage as warrants are exercised accelerating the company’s deleveraging strategy, the analyst said. BTIG believes the exercise of the tranche 1 warrants offers a clear path for debt retirement and an upward re-rating in the stock. (read more)

MUSK, TRUMP DISCUSS CRYPTO POLICY: Tesla (TSLA) CEO Elon Musk and former president Donald Trump have talked about cryptocurrency policy as Trump increasingly highlights bitcoin and other digital assets to attract new voters, Bloomberg’s Nancy Cook, Ted Mann and Ed Ludlow reported Thursday. According to a person with knowledge of the matter, Trump campaign officials have also discussed the possibility of inviting Musk to speak at the Republican convention, though they are far from making a final decision. Additionally, Musk, in a Thursday post on X, said “pretty sure I’ve never discussed crypto with Trump, although I am generally in favor of things that shift power from government to the people, which crypto can do.” (read more)

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

PRICE ACTION: As of time of writing, bitcoin was roughly flat this week at $68,373 in U.S. dollars, according to CoinDesk.