Crypto Mergers And Acquisitions (M&A) Surges As Rest of World Eclipses U.S. (#GotBitcoin?)
Deal value in the cryptocurrency world surpassed the total from 2019 in the first six months of the year as tie-ups became less frequent but bigger, according to PwC. Crypto M&A Surges Past 2019 Total As Rest of World Eclipses U.S. (#GotBitcoin?)
Global deal value was $597 million in the first half of 2020 compared with $481 million over the whole of last year, PwC said in a report on the crypto merger, acquisition and fund raising landscape.
While 2020 includes the purchase of CoinMarketCap.com by Binance Holdings Ltd., even factoring out that deal valued at $400 million in the report, the average size has risen but not the quantity — there were 125 tie-ups in 2019 versus 60 in the first half of 2020, PwC said. Activity continues to shift away from the Americas, with 57% of volume in Asia-Pacific and Europe, the Middle East and Africa in the first half versus 51% last year.
“We expect crypto M&A activity to remain strong for the coming months particularly with some of the larger or more profitable players acquiring firms that offer ancillary services to their current offerings,” said PwC Crypto Leader Henri Arslanian. “We should expect the large crypto unicorns to become increasingly like ‘crypto octopuses’ by acquiring or investing in various ancillary businesses in order to remain dominant.”
Crypto as an asset class is having a good year. The Bloomberg Galaxy Crypto Index is up more than 80%, compared with a gain of less than 10% for the S&P 500, as digital money benefits from a boom in decentralized finance and a maturing of the market. Companies like Square Inc. and MicroStrategy Inc. have put some of their money in crypto, as has legendary investor Paul Tudor Jones, boosting demand and demonstrating interest from bigger players.
The first half of this year also saw an increase in fund raising involving crypto exchanges or trading companies, PwC said. The report attributed the gain to rising crypto prices, increased institutional interest and greater regulatory clarity.
SEC-approved Crypto IPO Issuer INX Acquires STO Platform OpenFinance
The crypto industry records another major acquisition in 2020.
According to an official announcement, INX has signed a term sheet for the acquisition of OpenFinance, which operates as a registered broker-dealer in compliance with the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation.
With the new deal, INX is set to acquire OpenFinance’s broker-dealer and alternative trading system business including its systems, digital asset listings, client base and licenses.
OpenFinance’s listings include firms like major industry venture capital firm Blockchain Capital, Spice VC and Lottery.com. INX’s representatives said that their company will assure continuity of operations and service to OpenFinance’s customer base.
Shy Datika, president and founder of INX, outlined that the new acquisition will bolster INX’s leadership in the the digital assets’ ecosystem, stating:
“Digital securities represent a new evolution in traditional capital markets. There are massive benefits of listing and trading digital assets versus traditional equities. Openfinance has pioneered this space and earned the respect of Wall Street, the blockchain community, and U.S. regulators.”
Openfinance CEO Jim Stonebridge highlighted that INX and Openfinance share the same vision of providing a safe and regulated ecosystem for listing and trading of digital assets. “We believe that regulatory oversight, combined with liquidity, will make digital assets the financial instrument of choice for companies and investors seeking to access and raise capital,” Stonebridge noted.
The latest news comes amid the INX’s ongoing initial public offering, or IPO, registered with the United States Securities and Exchange Commission. Launched in August 2020, the $117 million IPO claims to be the first-ever security token IPO that is registered with the SEC. Starting from Sept. 14, INX’s IPO has been accepting major cryptocurrencies like Bitcoin (BTC) and Ether (ETH).
Top Crypto Mergers And Acquisitions Of 2020
Amid the chaos that was 2020, crypto companies inked almost $700 million worth of mergers and acquisitions.
The blockchain industry shrugged off the craziness of the 2020 pandemic, with many companies thriving in the “remote” working environments brought about by COVID-19.
Almost $700 million in mergers and acquisitions took place in 2020 across 83 transactions. That’s the largest number ever and a sizeable increase from the previous record of 69 M&A transactions in 2018. The majority of activity last year was within the industry itself, consolidating the sector with minimal engagement from external companies.
More than 90% of the $691 million reported was comprised of the top three acquisitions by Binance ($400 million), FTX ($150 million) and Coinbase ($90 million).
Binance’s purchase of CoinMarketCap at the end of March 2020 for a reported $400 million equaled the largest blockchain acquisitions of all time, rivaled only by Circle’s purchase of Poloniex and NXMH’s purchase of Bitstamp, both for $400 million, in 2018.
The leading exchange by volume received sharp criticism over the purchase, as it appears to represent a conflict of interest given that CoinMarketCap is a data and analytics company that provides comparative data about crypto exchanges, including Binance.
Jack Purdy, an analyst for Messari, told Cointelegraph that the takeover sets a negative precedent for the industry, no matter how well either company behaves. “It does represent a fundamental conflict of interest that has negative externalities for the space,” he said. “It’s like if Joe’s Pizza came out with the top 10 pizza slices in New York and everyone that uses that list happens to be those least informed to make the decision on where to go.”
“Even though Binance/CMC can be completely well-intentioned, it’s impossible for ratings not to be influenced by the underlying bias of the creators. If there are objective weightings to a system that would hurt Binance’s standing, it’s more likely than not that it won’t be implemented.”
Binance has claimed that both companies are individual entities and there is no bias from CMC. Despite the early criticism, it appears that sentiment toward the acquisition has softened in more recent months. In October 2020, FTX CEO Sam Bankman-Fried voiced his opinion on Twitter that Binance was actually a lifesaver for CoinMarketCap:
“Pretty much the day Binance bought CMC, it started getting better — a lot better. It has a lot of catching up to do, but the product has gone from hopelessly f—ed to competitive.”
This wasn’t the only activity by the leading exchange, with Binance acquiring multiple other companies throughout 2019 and 2020, including crypto debit card provider Swipe for an undisclosed sum. Similar to CoinMarketCap, Swipe chief operating officer John Khenneth also stated that “The deal was structured where Swipe is able to run the company independently from Binance.”
Other Binance acquisitions include Korea-based stablecoin company BxB, decentralized app information platform DappReview and Indian crypto exchange WazirX.
In a recent press conference, Binance founder and CEO Changpeng Zhou hinted that the company will acquire between 20 to 30 other companies in 2021, further strengthening its position in the crypto sector.
Crypto exchange FTX, which only launched in 2019, was the only other company to conduct a nine-figure acquisition in 2020, with the purchase of portfolio management app Blockfolio for $150 million.
The purchase has the potential to bring its 6 million users to the exchange. Although Blockfolio does not have as many unique users as CoinMarketCap, the level of user engagement is considerably higher, with more than 150 million impressions per month.
Blockfolio co-founder and CEO Ed Moncada told Cointelegraph that the company will continue to function as an independent app.
United States crypto exchange Coinbase actually leads the pack with the largest number of acquisitions to date — six more than Binance. The company has completed at least 16 deals in its history, with the most recent one being the acquisition of prime brokerage platform Tagomi for $90 million.
According to reports, Tagomi had been struggling with revenue as low as $1 million from its $1 billion in annual trading volume after it slashed trading fees.
Publicly traded companies also got involved, with advanced software solutions company CleanSpark acquiring crypto mining firm ATL Data Centers for just under $20 million worth of the company’s stock.
Other notable acquisitions include Galaxy Digital’s purchase of digital-asset investment and borrowing platform DrawBridge Lending, as well as futures markets liquidity provider Blue Fire Capital. Although the figures were not disclosed, Galaxy Digital said that DrawBridge will end up with more than $150 million in third-party assets as a result.
In September 2020, New York-based CB Insights announced it would soon open an office in Amsterdam as part of its acquisition of blockchain data provider Blockdata for an undisclosed sum.
Smart contract provider TrustSwap also expanded its reach, acquiring one of its biggest competitors, Team.Finance.
The recent acquisition of second-layer Ethereum scaling solution OMG Network by Hong Kong-based over-the-counter trading firm Genesis Block is said to help accelerate the network’s development, with a specific focus on DeFi.
PayPal was also looking to join the mergers-and-acquisitions party after enabling crypto purchases for the first time; however, talks to acquire crypto custody provider BitGo appear to have now fallen through. Rumors suggest PayPal is in talks with other crypto companies.
With the dramatic surge in decentralized finance this year, burgeoning DeFi protocols have also started merging. In November, Yearn.finance went on a collaboration and merger spree, including with market coverage provider Cover Protocol and lending protocol Cream Finance.
Although acquisitions are often a sign of a thriving industry, they have led to some critics raising concerns over increasing centralization. Acquisitions of rivals by leading companies strengthen their control of the market, potentially reducing competition.
Coinbase Buying Spree Continues With The Acquisition Of Bison Trails
Bison Trails, a leading blockchain infrastructure platform, has been acquired by the San Franciso-based exchange.
Coinbase, the U.S.-based cryptocurrency exchange, has made another strategic acquisition — this time in the critical field of blockchain infrastructure.
The company announced Tuesday that it had acquired Bison Trails, a fully managed blockchain infrastructure provider, in a deal that provides a “foundational element” within its growing ecosystem of products.
“By joining forces, we aim to bring the advanced technology that the Bison Trails team has developed — and continues to develop — to more projects and more companies around the world.”
Bison Trails will continue to operate as a standalone product, Coinbase said.
Founded in 2018, Bison Trails has carved out a strong reputation in the blockchain industry. Last November, Bison Trails launched its QT protocol allowing developers to build on Facebook’s libra forthcoming Libra blockchain. The company also pioneered new technology that addresses so-called slashing penalties associated with double signing messages, which is considered one of the biggest risks of blockchain participation.
Joe Lallouz, Bison Trails’ CEO, tells Cointelegraph that he and co-founder Aaron Henshaw officially unveiled their company to the world in Mar 2019. At the time, Bison Trails was marketed as the first “infrastructure as a service company designed for next-generation blockchain networks.”
“It’s remarkable to look back at that announcement post and recognize how little of our approach changed in the time since, despite the rapid growth and evolution of the ecosystem,” he said.
“We are incredibly excited to join Coinbase as a standalone product line in the Coinbase portfolio, an anchor of Coinbase’s third pillar of crypto services for developer tools and ecosystem advancement.”
As for Coinbase, the leading crypto exchange has been consolidating its already strong industry position ahead of an expected initial public offering later this year. As Cointelegraph reported earlier this month, Coinbase recently acquired the Routefire platform — a move that could significantly boost trade execution and help protect against severe outages during periods of volatility.
Coinbase boasts of more than 35 million verified users in over 100 countries. The company has reported cumulative trade volumes in excess of $320 billion, offering further validation that digital asset markets are here to stay.
Growing List Of Billion-Dollar Crypto ‘Unicorns’ Suggest The Best Is Yet To Come
More than 53 blockchain projects have emerged as multi-billion dollar market cap crypto unicorns, a signal that the 2021 bull market is just getting started.
In the traditional investing world ‘unicorn’ is a term used by venture capitalists to describe a privately held startup valued at more than $1 billion.
Typically these startups have strong fundamentals and oftentimes a first-mover advantage that helps them rapidly rise in value to become prized investment opportunities for yield-seeking funds.
Some of the best-known unicorns include Elon Musk’s SpaceX, a private rocket and spacecraft manufacturer with a valuation of $46 billion, and Coinbase, the largest U.S.-based cryptocurrency exchange with a current valuation of $8 billion.
While the world’s attention has been focused on the Coronavirus pandemic, the outcome of the 2020 U.S. presidential election, and the recent r/Wallstreetbets social investing phenomenon, the crypto sector has quietly ascended to a total valuation of over $1.2 trillion.
Adding to this, currently there are more than 55 unicorn status projects that have a market cap over $1 billion.
Recent Bitcoin (BTC) evangelism from the likes of Michael Saylor, Mark Cuban and Elon Musk are helping shine a spotlight on the nascent crypto industry, and with it comes the discerning eye of institutional investors who will quickly want to look beyond BTC to what other promising opportunities exist in the space.
These projects are no longer just focused on making cryptocurrency a global means of exchange. Some of the top projects include smart contract platforms, decentralized finance (DeFi) protocols, privacy tokens, oracles providers and even humor-oriented meme coins.
With that in mind, here are some of the top crypto unicorn projects to keep an eye on as institutions begin to make their presence felt in the cryptocurrency markets.
Bitcoin is the ultimate first-mover in the crypto space as it paved the way for the rest to come into existence and holds more than 61% of the total market value with a current market cap of $843 billion.
As the longest-running chain possessing the strongest mining network of all proof-of-work cryptocurrencies, BTC is likely to be the go-to choice for new money coming into the sector which will take a cautious approach to start out with.
Similar to how many of the current crypto faithful got involved in the space, Bitcoin will be the “gateway coin” that introduces the concept and leads to further exploration.
Ethereum (ETH), with a current market cap of $196 billion, is the obvious second choice as it is the most-utilized smart contract platform and home to a majority of the top DeFi protocols that have surged in popularity in recent months.
Other legacy projects that have survived multiple bull-bear cycles and achieved unicorn status include Litecoin (LTC), which has emerged as a reliable value transfer alternative to the higher fees and longer block times of BTC, and the privacy-focused Monero (XMR) and Zcash (ZEC), which paved the way in bringing anonymity to blockchain transactions.
These projects currently have market caps of $10.5 billion, $2.75 billion and $1.07 billion respectively.
Decentralized Finance Takes Center Stage
Since early 2020, one of the main driving forces in the growth of the cryptocurrency sector has been the emergence of decentralized finance.
Decentralized exchanges (DEX) like Uniswap have steadily grown from being a simple exchange interface dApp to a sprawling trading platform that now averages a 7-day trading volume of $6.72 billion, a figure that rivals volume of the top centralized exchanges.
Uniswap’s UNI governance token was initially airdropped to users of the interface who took a chance on the protocol while it was still in development, but now the token can be found on all major centralized and decentralized exchanges.
The protocol also received venture capital backing to ensure further development. With a current market cap of $5.9 billion and a token price of $19.79, Uniswap is likely to be on the watchlist for the smart money eyeing the space.
SushiSwap, the main competitor to Uniswap, has also achieved unicorn status with a current valuation of $1.8 billion. The platform offers a community-focused system that allows token holders to stake their SUSHI to participate in governance as well as earn passive income from trading fees generated by the protocol.
While DEXs helped facilitate the growth of DeFi, lending protocols have emerged as the top draw for total value locked (TVL) and higher token values.
Maker (MKR), AAVE and Compound (COMP) are the leading platforms when measured by the total value locked (TVL) in the protocol. Currently there is a combined $15.63 billion in value deposited in smart contracts that interact with the protocols and their market caps range from $2.1 billion to $5.98 billion.
In addition to the high yield opportunities offered by staking protocols, retail investors are also attracted to the governance features that give token holders a say in the future development of the protocol. These DeFi darlings are likely to pique the interest of long term capital.
Ethereum Congestion Drives Smart Contract Innovation
Ethereum’s dominance in DeFi has proven to be a double-edged sword as increasing network congestion resulted in an untenable surge in gas fees.
The recent record-high gas fees have opened the door for other smart contract platforms to fill the need for layer-2 options, as well as highlighting the need for oracle providers that can communicate data securely across platforms.
Promising smart contract platforms that have emerged include Polkadot (DOT) and its sister chain Kusama (KSM), which introduce interoperability with Ethereum and other top blockchains as the solution to the current siloed nature of separate networks.
DOT’s market cap has risen to $18.8 billion as its prominence continues to grow and Kusama is new to the unicorn club as its market cap just surpassed the $1 billion mark for the first time on Feb. 6.
Interestingly, Cardano (ADA), one of the 2017 ICO-era projects, has also started gaining momentum in recent weeks following the addition of smart contracts to the protocol and hints of future DeFi related endeavors.
Currently, Cardano’s market cap is $19.8 billion and the integration of DeFi could help propel its value higher as ADA has yet to tap into the liquidity offered on decentralized exchanges.
Theta captured the first-mover advantage when it comes to blockchain-based video streaming and the project has recently added smart contract functionality, the ability to create non-fungible tokens, and they launched the Thetaswap DEX on Feb. 4.
Oracles Join The Party
As more participants enter the crypto space and new blockchains emerge to fit specific niches, communication between separate networks will become essential to the overall health and continued growth of the sector.
This is where oracle projects come in to offer reliable, secure ways to transfer data.
Chainlink (LINK) is the top oracle project in terms of protocol integrations and its valuation. LINK currently has a $10.37 billion market cap and the project’s recent integration with Kraken exchange is expected to add further value to the project.
Meanwhile, upstarts like UMA and The Graph (GRT) have only recently achieved unicorn status as the 2021 bull market heats up. Both projects have developed novel ways to track, record and transmit data and they have reached valuations of $1.7 billion and $1.1 billion.
GRT has been especially active in the growth department, announcing multiple partnerships and upcoming integrations including bridges to DOT and Binance Coin (BNB).
The ‘Unicorn’ Herd Will Expand
Bitcoin burst onto the financial scene more than twelve years ago and has steadily forged a path to prominence that governments and the global financial system can no longer ignore.
Now that institutions are finally beginning to dip their toes into BTC and ETH, it’s time to take an even closer look at what the emerging blockchain ecosystem has to offer.
The herd of unicorns is likely to expand and considering that the decentralized finance sector is still in a very early growth stage, there’s plenty of value to be found in these unicorn projects.
Crypto Mergers And Acquisitions Doubled To $1.1B In 2020, PwC Reports
The average deal size in the crypto industry surged from $19 million last year to nearly $53 million in 2020, according to a new PwC report.
The consolidation of cryptocurrency-related companies surged massively in 2020, hitting a new record in deal activity, according to a new report by professional services network PwC.
The total volume of mergers and acquisitions in the crypto industry more than doubled from $481 million in 2019 to $1.1 billion in2020, PwC said in a Monday market overview, as seen by Bloomberg.
The average deal size in crypto surged from $19 million in 2019 to nearly $53 million, with crypto fundraising increasing 33% in overall value in 2020. Countries in the EMEA region saw a notable spike in the number of deals, while the Americas recorded a threefold growth in deal value.
Following new highs last year, deal activity in the crypto industry is likely to continue growing in 2021. PwC global crypto leader Henri Arslanian said that 2021 is “already on track to significantly surpass it from every single metric” as institutional players and high-profile investors are moving into the industry.
Alongside greater consolidation in crypto, PwC also predicted that the industry will become more institutionalized. The survey reportedly cited major gains in the crypto market — with Bitcoin hitting its all-time high of over $61,000 in mid-March — as well as the growing adoption of central bank digital currencies, stablecoins, decentralized finance and non-fungible tokens, also known as NFTs.
As previously reported by Cointelegraph, major global cryptocurrency exchanges like Binance, FTX and Coinbase made the top three acquisitions in the crypto industry in 2020.
Crypto M&A Set To Notch Record After Doubling In 2020, Says PwC
Deal activity in the cryptocurrency sector soared in 2020 and is likely to keep climbing this year, according to a report.
The total value of mergers and acquisitions in crypto more than doubled last year to $1.1 billion from 2019, and average deal size rose to $52.7 million from $19.2 million, PwC said in a market overview released Monday. A greater percentage of activity is taking place in Europe and Asia, and crypto fundraising increased by 33% in overall value from the prior year.
Last year was a record for M&A and crypto fundraising but 2021 “is already on track to significantly surpass it from every single metric,” said Henri Arslanian, PwC global crypto leader. Institutional players, large investors and cash-rich crypto platforms will drive activity, he said.
These latest data support the case that the cryptocurrency market is expanding. Bitcoin’s ninefold rise in the past year, more interest from large investors and endorsements from big names in finance have bolstered the asset class. But many skeptics remain, amid concerns that the boom in tokens reflects the impact of supersized stimulus and is a bubble that could burst.
Along with greater consolidation, PwC predicts the industry will become more institutionalized. The report cites the gains in crypto markets — which saw Bitcoin catapult to a record high near $62,000 this month — as well as the buzz surrounding central bank digital currencies, stablecoins, decentralized finance and nonfungible tokens.
Crypto Miner Riot Blockchain To Buy Whinstone For $651 Million
Cryptocurrency-mining company Riot Blockchain Inc. said it will buy North America’s largest Bitcoin hosting facility, Whinstone U.S. Inc., for about $651 million in cash and stock.
Riot Blockchain will purchase all of Rockdale, Texas-based Whinstone’s assets and operations for $80 million in cash plus a fixed 11.8 million shares of Riot common stock, according to a statement released Thursday.
Whinstone will be the “foundation” of the company’s Bitcoin mining operations, Riot Chief Executive Officer Jason Les said in the statement. Riot anticipates the purchase will make it the largest publicly-traded Bitcoin mining and hosting company in North America, measured by total developed capacity.
Whinstone’s facility has a power capacity of 750 MW, with 300 MW currently developed, an important asset for energy-intensive Bitcoin mining. The crypto miner said Wednesday that it would purchase 42,000 S19j Antminers for $138.5 million from Bitmain Technologies.
Northern Data AG, which acquired Whinstone in 2020, will own about 12% of Riot’s common shares upon the close of the transaction, expected by the end of June.
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