With the recent negative news about cryptocurrencies, domestic companies in the “mining circle” are the most seriously affected. The “cryptocurrency” companies, which mainly buy coins, are mainly affected in terms of investment and asset reserves.
As of press time, the price of one bitcoin is around $40,000. In stark contrast, in April, Bitcoin hit a record high of $64,374. In the same icy climate as the cryptocurrency market, there are related cryptocurrency concept stocks, such as Coinbase which has fallen below its offering price of $250 today, from $400 when it first went public in early April.
Since May 13, when Tesla CEO Musk called a halt to buying cars with bitcoin, the cryptocurrency market and related industries seem to be on a downward spiral.
However, the cryptocurrency price has yet to recover, and just recently, bitcoin has seen another regulatory upgrade from China. on Friday night, May 21, the Financial Stability Development Committee of the State Council held its 51st meeting, which stated that it is required to crack down on bitcoin mining and trading practices, and resolutely prevent individual risks from being passed on to the social sector.
How much impact did the shrinking coin prices and heavy-handed regulation have on related concept stocks?
The average U.S. Chinese stock fell by more than 40%, and most mining farms operate on a temporary policy
If the regulatory policy is implemented, the domestic related cryptocurrency industry, especially the upstream companies involved in mining, will be the first to bear the brunt.
Among the domestic US-listed concept stocks, those involved in the upstream business of cryptocurrencies include Bit Digital Inc (formerly PointCow Financial), Bit Mining (formerly 500Lottery.com), Yibang International, Jia Nan Technology, China Global Shipping, Ninth City and others. Since mid-April, when Bitcoin hit an all-time high, these stocks have fallen by more than 40%.
Most of the mining farms are still operating normally before the policy was handed down.
A bitcoin mining pool leader said, “Most of the mines are located in Sichuan and Inner Mongolia. Sichuan is mostly hydroelectric power generation, relatively clean energy, a lot of water resources are not used actually wasted, so we are not too worried; but Inner Mongolia are burning coal, so we are now worried about whether environmental action will have restrictions on mining.”
It is reported that on May 18, Inner Mongolia Autonomous Region Development and Reform Commission Inner Mongolia Autonomous Region Energy Consumption Double Control Emergency Command Office then issued “on the establishment of virtual currency “mining” enterprise reporting platform announcement”, the autonomous region’s energy consumption double control emergency command office to set up virtual currency “mining “enterprise reporting platform, comprehensive acceptance of virtual currency “mining” enterprise issues letter and visit reports. The announcement shows that the objects of the report are mainly virtual currency “mining” enterprises (including other hidden forms of “mining” enterprises and subjects); virtual currency disguised as data centers to enjoy preferential policies on taxation, land, electricity prices, etc. “Mining” enterprises; enterprises providing services such as renting space for virtual currency “mining” enterprises; enterprises obtaining electricity supply through illegal means and engaging in virtual currency “mining” business. In Sichuan, although the local government has not issued any relevant regulations, it has not issued any regulations.
In Sichuan, although no local policies have been issued to restrict mining, and the May water season is well underway, mining pools are limited by power outages.
On May 14, State Grid Sichuan Aba Electric Power Co., Ltd. issued a power outage notice. The notice shows that since May, Sichuan power grid load continues to grow at a high rate, coupled with low water supply, shortage of coal supply, the form of power supply is very serious. The relevant departments at the provincial level, the plan from May 16 onwards for hydropower consumption demonstration area in all big data users to implement temporary all-day power restrictions, recovery time depending on the supply and demand situation to be notified.
It is worth mentioning that the Chinese stock Bit Mining’s subsidiary, Lotto Mutual Entertainment, currently operates three mines, two of which are located in Sichuan.
What is more noteworthy is that many of the aforementioned Chinese companies are transforming from this year by targeting the windfall of cryptocurrency, especially those with mining as their main business.
Coinbase has fallen below the issue price, intends to issue debt to raise 1.25 billion
In addition to the domestic mining enterprises affected by the policy and the weakness of the cryptocurrency market, the situation of overseas enterprises is not optimistic. Coinbase, the largest cryptocurrency exchange in the U.S., which was previously listed shortly after, has fallen below its offering price and has made record lows.
Coinbase first fell below its $250 offering price on May 17 EST, and nearly fell below the $200 mark on May 19. As of this writing, Coinbase’s latest share price was $225.3.
Only a short time ago, Coinbase officially announced its first quarter 2021 earnings. The earnings report, while meeting expected levels, did not bring much of a market reaction, as the company had already announced its initial results earlier.
Just two days after Coinbase fell below its offering price, on May 19, Coinbase announced plans to issue $1.25 billion of convertible notes due 2026. Coinbase also expects to offer initial purchasers of the notes a 30-day option to purchase up to an additional $187.5 million principal amount of notes to cover over-allotments. These notes will be unsecured debt payable on a senior basis by Coinbase, will pay interest semi-annually and mature on June 1, 2026, unless repurchased, redeemed or converted earlier.
Coinbase describes the capital raising as primarily intended to strengthen the company’s balance sheet, with the net proceeds to be used to meet general corporate purposes, which may include working capital and capital expenditures.
However, Coinbase had a very high valuation and ample cash reserves prior to its IPO, and this move to issue debt to raise funds seems out of step with the pre-IPO disclosures, and comes shortly after the company fell below its offering price, a period of considerable market anxiety.
Meitu lost over $10 million in coin speculation, and Tesla’s assets were impaired by over $100 million
With the plunge of cryptocurrencies, some companies that made profits from “coin speculation” in the early days began to suffer losses and their share prices were affected, including Meitu and Tesla.
On April 9, Meitu announced on the Hong Kong Stock Exchange that it had purchased $10 million worth of bitcoin in the name of a wholly-owned subsidiary, bringing the company’s total investment in cryptocurrencies to $100 million.
First purchase on March 7: 379 bitcoins for $47,214; 15,000 Ether for $1,473; second purchase on March 17: 386 bitcoins for $55,946; 16,000 Ether for $1,775; third purchase on April 8: 175 bitcoins for an average purchase price of $56,922 USD.
If Metu had not reduced its position during the period, it would now hold more than 940 bitcoins, with an average buy price of about $52,610, and 31,000 Ether coins, with an average buy price of about $1,629.
According to coindesk real-time market data, the bitcoin price stabilized around $35,000, then Metu holds a loss of $16.55 million in bitcoin. Bitcoin’s all-time high had reached $63,346, then Meitu had made a profit of $10.09 million at one point. Currently Ether has not fallen below Metu’s buy price, making a profit of about $14.6 million.
As of press time, Meitu’s share price is at HK$2.03, which has plunged more than 50% since the high point this year.
In addition, the “speculative” big brother Musk under the leadership of Tesla’s investment in bitcoin may also lose money.
According to Barron′s calculations on the 23rd, Tesla’s bitcoin investment book has fallen into the red. The report points out that Tesla announced a $1.5 billion bitcoin investment position on Feb. 8, when it was quoted at about $38,000, while the average price of bitcoin was $36,700 between Jan. 27, when Tesla held its Q4 2020 earnings call (no bitcoin position was disclosed at the time), and Feb. 8.
Barron’s calculates that Tesla likely held about 42,000 bitcoins at the end of Q1, and that the recent collapse in the price has resulted in an asset impairment loss of about $125 million. Unless bitcoin rallies from now until the end of June, Tesla may have to recognize a bitcoin-related asset impairment when it reports its Q2 earnings in July, the report said.
On May 19, Tesla’s shares were once near their lowest point of the year at $539, but they have recently recovered. As of this writing, Tesla shares are trading at $606.44.
Recently, there have been a lot of negative news about cryptocurrencies, and obviously, the domestic “mining circle” enterprises are the most seriously affected. This is because many companies whose original main business has been declining have been transforming this year by targeting cryptocurrencies, especially those Chinese companies whose main business is mining. Once mining is completely banned in China, the costs invested by these companies in the crypto industry will be wasted. The main impact on the “cryptocurrency” companies, which mainly buy coins, will be on their investments and asset reserves, and the results will probably be reflected in the next earnings season.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/cryptocurrency-concept-stocks-latest-status-u-s-chinese-stocks-fell-40-coinbase-fell-below-the-issue-price-metu-tesla-investment-losses/
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