The Miner Crisis, Coinbase's Losses, and Who's the New Star on the Crypto Horizon?

Bitcoin miners are struggling with adversity, Coinbase is trying to distract from disappointing results, and sources are reporting that Meta may be looking to re-enter the stablecoin world.

Setback for Bitcoin miners

It’s been a bleak week for publicly traded Bitcoin miners. MARA Holdings, which trades on the Nasdaq under the ticker symbol MARA, couldn’t escape a disappointing quarterly report with a new supply of BTC. At the end of March, when Bitcoin Trading around $83.000, the company announced a $2 billion equity offering to raise funds for “general corporate purposes, including the acquisition of Bitcoin and for working capital.” MARA is no stranger to buying Bitcoin on the open market.

Still, the company’s next quarterly results didn’t go unnoticed, with the company reporting a $533 million loss in the first quarter, largely due to a balance sheet valuation adjustment for Bitcoin. More troubling, production fell 19% despite the company doubling its capacity since the Bitcoin network’s 2024 halving. These halvings cut the miner’s reward in half, with the most recent halving dropping the reward to 3,125 BTC.

Despite this, investor panic appears to be limited. MARA opened trading on Friday up 6% to $15,16 from the previous day. While MARA bought Bitcoin in the first quarter, rival Riot Platforms scooped up the largest number of publicly traded miners in April, selling 475 Bitcoin worth $38,8 million.

Are the mining rigs going to lock up? Not quite, according to analysts at investment bank Benchmark. This week, they gave a $3 price target and a buy rating for Canaan, which also trades on the Nasdaq under the ticker symbol CAN.

Deja Vu for Meta

A new company could be added to the Public Keys list. Meta, Facebook's parent company that trades on the Nasdaq under the ticker symbol META, won't comment on the record, but five anonymous sources told Fortune that the company is considering using stablecoins to reward content creators on its platforms. According to a crypto executive, the Meta subsidiary Instagram could use stablecoins to pay lower fees for small payments of $100 or less to content creators. However, those involved stressed that the company is still in an exploratory phase and that implementation could take some time.

Very recognizable, because in 2019 Meta already tried to launch its own stablecoin, Diem. However, this initiative collapsed after critical reactions from regulators, causing the project to be shut down in 2022 and the assets to be sold to the now bankrupt bank Silvergate.

However, several shareholders are keeping their fingers crossed that Meta will first abandon one of its less successful experiments before embarking on a new adventure. Analysts have been calling for the company to abandon its Reality Labs project, responsible for the Quest VR headset and augmented reality sunglasses, for some time now. Forrester analyst Mike Proulx called Reality Labs a “leaky bucket” after the company reported that the division lost $4,2 billion in the first quarter, with cumulative losses of as much as $60 billion.

Coinbase is missing the opportunity – look over there!

Maybe it’s just us, but flashy announcements leading up to quarterly results usually give the impression of a less-than-stellar performance. And, yes, that was the case for Coinbase this week.

On Wednesday, the company released a trove of documents from a FOIA request, detailing publicly disclosed SEC, FDIC and other agencies’ investigations into Ethereum and efforts to bar crypto companies. Thursday began with the announcement of its nearly $3 billion acquisition of crypto derivatives exchange Deribit. But after-hours results showed a sharp drop in retail trading volume.

It’s hardly surprising. Global markets have been roiled by fractious trade negotiations, or lack thereof, for months. But CEO Brian Armstrong still has ambitions for USDC to become the largest US dollar-based stablecoin in the coming years. And it’s not just for glory; USDC is also a significant revenue generator for Coinbase. The deal with Circle, which evenly splits interest on the cash behind a USDC token, is “infinitely renewable,” Armstrong said. He added that “higher USDC balances on our platform result in continued revenue for Coinbase.” USDC stability on the platform increased 12% QoQ, totaling $4 billion in Q1.

Other Insights

1. Crypto treasuries on the rise: It seems a little boring to just have a Bitcoin stash. (Billionaire investor Tim Draper even calls it “irresponsible” not to own any crypto.) That’s why DeFi Development Corp., formerly Janover, has raised $11,2 million in Solana bought, and XRP received a $50 million pat on the back from Wellgistics Health.
2. Chat with Strategy: At this week’s Strategy World event, Executive Chairman Michael Sayor revealed that AI chatbots helped the company come up with financial products that helped generate $52 billion in Bitcoin assets. The products, “Strife” and “Strike,” were co-developed with the help of AI.

Frequently Asked Questions

How did Bitcoin miners perform this week?
Bitcoin miners had a challenging week with significant losses and a drop in production.

What is Meta's role in the world of stablecoins?
Meta is considering possibly using stablecoins to reward content creators, but remains in the exploratory phase for now.

Why Did Coinbase Have a Disappointing Quarter?
A significant drop in retail trading volume led to disappointing quarterly results, despite some high-profile announcements ahead of the figures.