The Cryptocurrency space is on fire once again as the price of Bitcoin rages to new all-time highs, flying higher in recent days to surpass levels last seen at its mania highs in December 2017.
The big catalyst fueling the move is clear: mainstream acceptance and integration signaled by recent moves from PayPal and Square to start investing in and using Bitcoin, which has legitimated the cryptocurrency space and thesis, branding it as a viable alternative asset for mainstream use as a medium of exchange and as an inflation hedge for asset allocators and money managers.
Since news emerged from PayPal in October, Bitcoin has ramped over 65% higher as major investors and money managers began diversifying both growth and inflation-hedge capital into the market in a FOMO sprint that has reignited the speculative juices lying dormant for the past 3 years.
While traders and investors are chasing the coins, the smart money may well be looking at the relatively small number of publicly traded companies with ties to the crypto space as a secondary play on the action. The risk-reward ratio may be more interesting given that some of these stocks have only just started to react and reprice. Those with current or approaching real operations tied to the crypto space may be seeing a tangible and large jump in fundamental value driven by the increase in the price of Bitcoin that has yet to be priced into shares.
With that in mind, we take a look at some of the more interesting names in the space, including: Square Inc. (NYSE:SQ), Riot Blockchain Inc. (NASDAQ:RIOT), ISW Holdings Inc. (OTC US:ISWH), and HIVE Blockchain Technologies Ltd (OTC US:HVBTF).
Square Inc. (NYSE: SQ) provides payment and point-of-sale solutions in the United States and internationally. The company’s commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions.
It offers hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Chip card reader, which accepts EMV chip cards and enables swiped transactions of magnetic stripe cards; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; and Square Register that combines its hardware, point-of-sale software, and payments technology, as well as managed payments solutions.
Square Inc. (NYSE: SQ) made big headlines back in October when it announced that it had purchased approximately 4,709 bitcoins at an aggregate purchase price of $50 million. Bitcoin was trading at just over $10k at the time, and it has already nearly doubled.
According to the company, Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose. The investment represents approximately one percent of Square’s total assets as of the end of the second quarter of 2020.
SQ shares are acting very well over the past five days, up about 8% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 36% in that time on strong overall action.
Square Inc. (NYSE: SQ) pulled in sales of $3B in its last reported quarterly financials, representing top line growth of 139.6%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($2.9B against $3.8B, respectively).
Riot Blockchain Inc. (NASDAQ: RIOT) is a well-known player in the crypto space. The company specializes in cryptocurrency mining with a focus on bitcoin. Riot also holds non-controlling investments in blockchain technology companies.
Riot is headquartered in Castle Rock, Colorado, and the Company’s primary mining facility is located in Massena, New York under a colocation agreement with Coinmint.
Riot Blockchain Inc. (NASDAQ: RIOT) most recently announced that Hubert Marleau has been appointed to the Company’s Board of Directors, effective today, to fill the previously announced vacancy.
According to the company’s release, Mr. Marleau, age 76, is a veteran capital markets professional, corporate director, and Chair of the Marleau Lecture Series on Economic and Monetary Policy at the University of Ottawa. Currently, he serves as Chief Economist at Palos Management, a boutique investment management firm headquartered in Montreal, Canada. In addition to a career in the capital markets that has spanned over five decades, Mr. Marleau has previously served as a Governor of the Montreal and Vancouver stock exchanges, and as a Director of the Listing Committee for the Toronto Stock Exchange and Director of the Investment Dealers Association of Canada (now known as IIROC).
If you’re long this stock, then you’re liking how the stock has responded to the announcement. RIOT shares have been moving higher over the past week overall, pushing about 41% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 158% in that time on strong overall action.
Riot Blockchain Inc. (NASDAQ: RIOT) generated sales of $2.5M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 26.8% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($39.1M against $1.3M).
ISW Holdings Inc. (OTC US: ISWH) is clearly the most speculative name on this list, but it may also be the most underpriced relative to its positioning and recent catalysts. The company formed a partnership with Bit5ive over the summer vaulting it into a very interesting narrative under the radar in the crypto space.
ISWH recently announced that its new Proceso, Pod5ive datacenter pod, which is capable of driving Megawatt-level cryptocurrency computational mining power, has been fully assembled and is now ready for shipment to the 100 MW renewable energy Bit5ive LLC cryptocurrency mining project based in Pennsylvania.
“The job now is about bringing in revenues from participation in the Bit5ive Pennsylvania project while simultaneously building a track record for the Proceso, Pod5ive Data Center Pods as a global best-in-class solution for mining facilities around the world,” remarked Alonzo Pierce, President and Chairman of ISW Holdings. “We have begun sourcing partnerships in this endeavor, and we feel our technology division has an extremely bright future ahead in step with the growing success of Bitcoin and the broader cryptocurrency space.”
ISW Holdings Inc. (OTC US: ISWH) followed that up this morning with news that it is negotiating with its noteholders toward the establishment of a new agreement that will form the foundation for its emerging anti-dilution policy designed to protect the value of its common stock and return more of that value to its shareholders.
According to the release, the current negotiation contemplates an agreement whereby noteholders will exchange their notes for preferred restricted shares, reducing debt on the balance sheet and protecting shareholders against dilution. While this arrangement is not yet currently in place, the company is making active strides toward establishing it in principle as a template for future funding rounds going forward. In addition, to augment this step, the company has already begun to cancel out restricted shares in a process that it believes will lead to more than 8 million shares (nearly 25% of the company’s outstanding shares) being returned back to treasury.
“We are moving toward the commercial launch of our Cryptocurrency segment, which was established this summer through our partnership with Bit5ive, LLC,” noted Pierce. “We also continue to see very strong tangible growth in our Home and Telehealth Healthcare segment, where we just posted strong top and bottom-line data for Q3 and where we are already on pace to post new record numbers to close out the year. As these efforts get off the ground, we want to take steps now to ensure that the value we are creating confers to our common shareholders. In short, we are determined to keep the share structure attractive to investors while bringing in solid and growing revenues.”
ISW Holdings Inc. (OTC US: ISWH) has demonstrated rapid topline growth in its home healthcare operations with six consecutive quarters of sharp sequential growth. Its most recent quarter put the company on an annual run-rate to pull in more than $1.5 million in revenues not counting what appears to be significant growth brewing in its Proceso cryptocurrency mining and mining equipment segment over coming months. That could have huge implications for a stock now trading on a market cap of just over $1 million.
HIVE Blockchain Technologies Ltd (OTC US: HVBTF) trumpets itself as a growth oriented, TSX.V-listed company building a bridge from the blockchain sector to traditional capital markets.
HIVE owns state-of-the-art green energy-powered data centre facilities in Canada, Sweden, and Iceland which produce newly minted digital currencies like Bitcoin and Ethereum continuously on the cloud. Its deployments provide shareholders with exposure to the operating margins of digital currency mining as well as a portfolio of crypto-coins.
HIVE Blockchain Technologies Ltd (OTC US: HVBTF) recently announced that it has entered into a non-binding, exclusive memorandum of understanding (MOU) with GPU.One Holding Inc. (GPU.One) to expand HIVEs Canadian footprint through the potential purchase of GPU Atlantic Inc. (GPU Atlantic).
“We are excited about this opportunity for HIVE to expand our Canadian footprint through the acquisition of this data centre campus which has access to 50 megawatts (MW) of low-cost green power in Grand Falls, New Brunswick,” said Frank Holmes, Interim Executive Chairman of HIVE. “Mr. Holmes added, Further, and important to building our vision, is the GPU.One team of young, skilled and proven data centre professionals with deep high density data centre build out and maintenance experience who will take on executive positions within HIVEs organization.”
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 75% in that timeframe.
HIVE Blockchain Technologies Ltd (OTC US: HVBTF) managed to rope in revenues totaling $9.1M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -25.3%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($10.6M against $13M, respectively).
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