Here comes Friday, March 15th. As the ongoing week elapses, we can focus on the industry highlights over the past few days.
Coinbase to generate $1B through convertible bonds offering
The leading US-based cryptocurrency exchange seeks to raise $1 bln via a private sale of bonds that can be converted into stock. These funds are expected to be used for debt repayment, general corporate needs and presumably for acquisitions of other companies.
Initial purchasers can acquire up to $150 million in additional securities.
The offering in question includes a “negotiated capped call transactions” clause intended to minimize equity dilution on conversion of the notes. Such an option is to be implemented by 2030. Should it be fulfilled, bondholders will be able to choose whether to obtain shares of the company or receive cash compensation.
The listing will be made “subject to market conditions and other factors” as well as the specific parameters will be determined at the time of issuance. Only eligible investors will have access to the securities.
BTC hodlers break the ice in taking profit
Bitcoin’s rally above the $70,000 mark caused a dramatic shift in the sentiment of both long-term investors and speculators, according to on-chain metrics provided by Glassnode.
In addition to the price swing, the realized price index also hit an all-time high. The indicator which evaluates total “on-chain cost basis,” has surged by $40 billion to $504 billion since March 1.
The monthly growth rate of the indicator approached $54 billion, a figure last seen during the 2021 bull market. As per analysts, this underscores how significant capital inflows have been in light of the success of ETFs in the US.
Since October 2023, the share of “realized cap” attributable to ‘young’ coins (with the price fluctuations within the last three months) has jumped by 138%. This was made possible by net sales of those market participants who purchased Bitcoin at lower prices.
White House puts forward 30% energy tax on BTC mining
The recently-proposed bill states that increased energy consumption in the mining of digital assets is detrimental for the environment and thus it is driving up electricity costs. The tax is supposed to be introduced gradually, starting at 10% in 2025, then 20% the following year and reaching 30%.
The taxable base is the electricity consumed when mining crypto, even if it is derived from renewable sources and off-grid.
VP of Research at Riot Platforms Pierre Rochard describes the proposed reasons for the excise tax as “pretextual.” He suggests that the Biden’s real goal is to “suppress Bitcoin and launch a CBDC.”
Some have questioned Rochard’s assumptions, reminding him that the decision to introduce a digital dollar is up to Congress, not to the presidential office. Jerome Powell, the head of the Federal Reserve (the Fed) confirmed this at a recent Senate hearing.
Miner stock gains to outperform Bitcoin as it eyes $150,000
Bernstein experts claim that crypto mining companies stocks remain one of the best bitcoin-related investments, especially as the first-ever cryptocurrency heads toward its $150,000 target level.
In a note to clients, Gautam Chhugani and Mahika Sapra highlight that historically, miner stock gains have almost always climbed faster than the BTC exchange rate during a bull market. “Investors have to take a through-cycle view and for us, we are still mid-way into the 2024-25 cycle and see every window of miner weakness as a buying opportunity,” they said.
Experts note that retail investors dominate the crypto sector while institutional investors mostly avoid investing in bitcoin proxies due to their overall skepticism towards crypto.
Nevertheless, as the asset price surpasses new highs, analysts anticipate heightened interest among institutional investors in industry-related stocks. Moreover, according to Chhugani and Sapra, the main beneficiaries of such an inflow of funds are mostly miners.
Experts draw special attention to the shares of Riot Platforms and CleanSpark. Despite the upcoming halving, the analysts believe that investing in these entities could yield 60-70% returns if the bitcoin value flatlines or goes even higher.