Mining Malaise, Coinbase Miss and Hey, Who’s the New Kid?

Public Keys is a weekly roundup from Decrypt that tracks the key publicly traded crypto companies. This week: Bitcoin miners wrangle with malaise, Coinbase tries a little misdirection ahead of its earnings miss, and sources say Meta is stablecoin curious.

Bitcoin miners’ malaise

Publicly traded Bitcoin miners have faced some dark days this week.

Stocking up on BTC wasn’t enough to help MARA Holdings, which trades on the Nasdaq under the MARA ticker, outrun a lousy quarterly report on Thursday.

Remember that at the end of March 31, when Bitcoin was trading for around $83,000, the company announced a $2 billion stock offering to raise cash for “general corporate purposes, including the acquisition of Bitcoin and for working capital.” And the company has been no stranger to acquiring Bitcoin on the open market.

Whatever gains the company might realize on BTC purchases with its latest offering will be fodder for Q2 earnings. The company posted a $533 million Q1 loss yesterday, largely due to having to adjust the valuation of Bitcoin that’s on its balance sheet.

But here’s the really troubling detail: Mining output fell 19% even though the Florida company has now doubled its capacity since the 2024 Bitcoin network’s halving.

A quick refresher: The Bitcoin network has now undergone four halving events, which reduce the reward paid to Bitcoin miners by half. Last year’s event saw the reward drop to 3.125 BTC.

But that doesn’t mean investors are racing for the doors. MARA opened Friday trading for $15.16, 6% higher than yesterday’s close. And while MARA bought Bitcoin in Q1, its rival Riot Platforms outsold all other publicly traded miners by unloading 475 Bitcoin in April, worth $38.8 million at the time.

Time to moth ball the mining rigs? Nah, not all of them, according to investment bank Benchmark. On Tuesday, the bank’s analysts set a 5x price target of $3 and buy rating for Canaan, which trades on Nasdaq under the CAN ticker.

Equity research analyst Mark Palmer is betting that Canaan’s North American expansion will help its stock rise. But a few hours before the closing bell Friday, it was down 5.87% for the week and trading for $0.75.

Deja Vu for Meta

There might be a new company in the Public Keys cohort soon.

Meta, which trades on the Nasdaq under the META ticker, doesn’t want to say anything about it on the record, but five unnamed sources told Fortune that the Facebook parent company is exploring the idea of using stablecoins to reward content creators on its platforms.

One of the crypto execs who spoke with the magazine posited that Meta subsidiary Instagram could use stablecoins to pay lower fees on small payments of $100 or less to content creators. Execs who spilled the deets to Fortune were careful to say the company is very much in the exploratory phase and that implementation could be a ways off.

If this sounds familiar, it’s because the company tried to roll out its own stablecoin, Diem, in 2019. But it got a slap on the wrist from regulators and abandoned the project in 2022 by selling the assets to now-defunct crypto-friendly bank Silvergate.

But shareholders might want to see Meta drop one of its lagging experiments before it picks up a new one. Analysts have been calling for the company to abandon its Reality Labs project, which is responsible for the Quest VR headset, augmented reality sunglasses, and the Horizon Worlds metaverse game.

Forrester analyst Mike Proulx has called Reality Labs a “leaky bucket” after the company’s Q1 earnings report revealed the division had lost $4.2 billion in Q1, bringing its cumulative losses to $60 billion.

Coinbase misses on revenue—look over there!

Maybe it’s just us, but splashy announcements ahead of earnings usually mean there’s been less than stellar performance for the quarter.

At least, that was the case for Coinbase this week.

On Wednesday, the company released the spoils of its FOIA request to get public records from the SEC, FDIC and other agencies on their investigations into Ethereum and efforts to debank crypto firms.

Then, on Thursday, the company started the day touting its nearly $3 billion acquisition of crypto derivatives exchange Deribit. But the company’s after market earnings report showed that it saw a big slowdown in retail trading volume.

It’s not entirely surprising. Global markets have been at the mercy of fractious trade negotiations—or lack thereof—for months.

CEO Brian Armstrong said he still wants to see USDC become the largest U.S. dollar-backed stablecoin within a couple years. It’s not just for bragging rights, either. USDC is still a huge money maker for Coinbase.

The exchange’s deal with Circle, which evenly splits interest earned on the cash backing USDC tokens, is “indefinitely renewable,” CEO Brian Armstrong said on the company’s earnings call Thursday.

“Increased USDC balances on our platform result in durable revenue for Coinbase. Base stablecoin balances reached $4 billion in Q1, up 12% quarter-over-quarter. This was also largely driven by USDC,” he added.

Other Keys

• Crypto treasuries, ahoy: It’s a bit boring now to just have a Bitcoin stockpile. (And downright “irresponsible” to have no crypto at all, if you ask billionaire investor Tim Draper.) To that end, DeFi Development Corp., formerly Janover, picked up $11.2 million worth of Solana, and XRP just got a $50 million Wall Street hug from Wellgistics Health.
• Chatty Strategy: During the Strategy World event this week, Executive Chairman Michael Sayor revealed that AI chatbots have helped the company come up with some of the financial products helping the company amass its $52 billion Bitcoin fortune. And yes, that’s how the company came up with its convertible preferred stock products named “Strife” and “Strike”—they were designed with AI.