Companies Cashing in on the Cryptocurrency Craze
Whether or not you’re a believer in the value and sustainability of cryptocurrencies, there is no denying that it’s a major commodity these days. The value of the cryptocurrency market topped $2 trillion for the first time in April. And even though crypto took a beating after Elon Musk denounced the massive carbon footprint caused by mining new coins, New Street Advisors Group founder and CEO Delano Saporu said the drop created a great opportunity to buy.
While cryptocurrencies have been making headlines more often in recent weeks, numerous publicly traded firms have been involved in the crypto space for years. Here are a few:
Mining Bitcoin and Ethereum – the most popular and widely accepted cryptocurrencies – require complex algorithms and massive computer processing power. Cryptocurrency miners have frequently turned to processors like those made by NVIDIA (Tii:NVDA). In fact, miners purchase so many that gamers – the original intended market for the cards – are frequently unable to acquire them. In the last quarter of 2020, it’s estimated that NVIDIA sold at least $175 million worth of its GeForce RTX 30 graphics cards directly to Ethereum miners. The chipmaker has since launched a dedicated GPU specifically designed for professional crypto mining. NVIDIA’s CEO has released statements predicting the supply of graphics cards in the retail market for gamers should normalize sometime this year.
Elon Musk shook up Bitcoin recently when he revealed that Tesla Inc. (Tii:TSLA) would no longer accept the cryptocurrency as payment. After publicly endorsing the cryptocurrency for months, the billionaire performed an about-face, citing environmental damage incurred as a result of the large amounts of energy used to mine new coins. However, Tesla’s holdings in the cryptocurrency still constitute one of the world’s top five Bitcoin stashes. Estimates based on the company’s earnings report for the first quarter of 2021 put Tesla’s ownership at approximately $2.07 billion worth of Bitcoin.
While Bitcoin trades on several different exchanges, including Coinbase, Kraken, Gemini, and Binance, CME Group (Tii:CME), the world’s leading and most diverse derivatives marketplace, is capitalizing on the popularity of cryptocurrency trading. CME enables trading of Bitcoin futures and options, Micro Bitcoin Futures, and Ether futures. Its recently launched Micro Bitcoin futures represent one-tenth of a Bitcoin and are meant to be a cost-effective way to fine-tune exposure to the cryptocurrency.
A leader in the digital payments space, Square Inc. (Tii:SQ) is linked to blockchain and cryptocurrency in two ways. First, its Cash App person-to-person payment platform allows for easy buying and selling of Bitcoin. In the third quarter of 2020 alone, more than $1.6 billion in Bitcoin was purchased through the app. Additionally, Square holds 5% of its cash in Bitcoin. However, the company recently announced that, after a $20 million loss on tumbling Bitcoin prices, that they will not buy more of the cryptocurrency. Like Tesla, Square also cited the large carbon footprint of Bitcoin as a factor in its decision.
In 2015, DocuSign, Inc. (Tii:DOCU) collaborated with Visa Inc. (Tii:V) on one of the first public prototypes of a blockchain-based smart contract. It is now a leader in blockchain-based solutions, leveraging the technology to create eSignatures. Blockchain, a decentralized ledger of all transactions across a peer-to-peer network, is the same technology on which many cryptocurrencies are based. The company’s VeriDoc Global is a blockchain solution designed to eliminate document fraud and counterfeits. Using a mobile device, anyone can scan a VeriDoc Global secured QR code and verify within seconds whether something is real or fake.
Though the future of cryptocurrency remains uncertain, its popularity as an investment vehicle and trading commodity remains strong for the time being. So, for now, expect to see these and other companies dipping their toes or plunging headfirst into the crypto space.