Marathon Digital bungles crypto impairment sums, will reissue financials

March 1, 2023 Coin Telegraph

accounting

The Bitcoin miner received a letter from the Securities and Exchange Commission highlighting accounting mistakes it made on multiple financial disclosures.

Bitcoin (BTC) miner Marathon Digital will reissue a number of previous financial statements after the United States Securities and Exchange Commission pointed out some accounting errors the firm made.

According to a Feb. 27 SEC filing, Marathon will restate its unaudited Q1, Q2, and Q3 quarterly reports from both 2021 and 2022 in addition to its audited annual report from 2021.

Marathon noted that affected financial statements, related earnings releases and other financial communications during these periods “should not be relied upon.”

The issues highlighted by the SEC on Feb. 22 were Marathon’s method for calculating impairment on digital assets, as well as Marathon’s determination that it had acted as an agent while operating a Bitcoin mining pool rather than a principal.

A principal is an entity that has the legal authority for decisions, while an agent is an entity that can only act on behalf of a principal.

Marathon noted that by changing the determination of its role in operating the pool from an agent to a principal, revenues and cost of revenues will see minor increases but does not believe the change will impact its bottom line.

“The restatement of the Impacted Financial Statements is not expected to have any impact on total margin, operating income or net income in 2021 or in any of the interim periods in 2021 or 2022.”

As a result of the accounting issues, Marathon postponed its fourth-quarter 2022 earnings call, which was set to take place on Feb. 28, and will postpone the publication of its corresponding financial results.

Today, we announced that we are cancelling our webcast and conference call for Q4 & FY 2022, initially scheduled for today at 4:30 p.m. ET, and are postponing the publication of our corresponding financial results. For more, please see this press release: https://t.co/UAryIr56aC
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) February 28, 2023

Marathon intends to file its results for 2022 by March 16. It has notified the SEC it would take up to 15 days to make the necessary corrections to the report, which was previously due by March 1.

The miner announced on Feb. 2 that it had sold 1,500 BTC throughout January, marking the first time it had sold Bitcoin since Oct. 1, 2020, as it looks to build up a “war chest” of both cash and Bitcoin and ensure it can be flexible throughout 2023.

While 2022 proved to be a tough year for Bitcoin miners — leading to the capitulation of firms such as Core Scientific in December — an increasing BTC price and stable electricity prices have helped the industry rebound strongly so far in 2023, with production and hash rates generally up across the board.

Stablecoins and CBDCs might play ‘meaningful role’ in payments — Visa CEO

January 25, 2023 Coin Telegraph

al kelly

Visa began working on a blockchain interoperability project in Sept. 2021 to support CBDC and stablecoin adoption but few updates have been made since.

The chief executive of credit card giant Visa remains confident that blockchain-powered solutions can be integrated into its services and offerings to power the next generation of payments.

Speaking on a call at Visa’s annual stockholder meeting on Jan. 24, outgoing CEO Al Kelly — who will officially step down on Feb. 1 — briefly shared the firm’s plans for Central Bank Digital Currencies (CBDCs) and private stablecoins.

According to a Jan. 24 report from San Francisco Business Times, Kelly said:

“It’s very early days, but we continue to believe that stablecoins and Central Bank Digital Currencies have the potential to play a meaningful role in the payments space, and we have a number of initiatives underway.”

“We’ve had an immaterial amount of investments in crypto funds and companies as we seek to invest in the payments ecosystem,” the outgoing CEO explained.

Kelly also confirmed that Visa’s balance sheet hasn’t been impacted by some of the “high-profile failures” that rocked the cryptocurrency space in 2022:

“We’ve had no credit losses related to these failures [...] In everything we do, please know that we’re extremely focused on maintaining the integrity of Visa’s payment system and the payment system in totality and of course, the reputation of our brand standing for trust.”

Over the years, Visa has worked on a number of crypto-related initiatives.

Its research team began working on a blockchain interoperability project in September 2021, named the Universal Payment Channel (UPC) initiative, the project was designed to establish a “network of networks” for CBDCs and private stablecoins to pass through various payment channels.

Visa hasn’t provided an update on the UPC in over 12 months, however.

More recently, the payment giant announced on Dec. 20, 2022, that it was chalking up a plan to allow automated bills to be paid out from a user’s Ethereum-powered wallet.

Visa has also rolled out several “zero fee” cryptocurrency debit cards of late including a now-terminated agreement with FTX and a partnership with Blockchain.com on Oct. 26, 2022, which is still in effect.

*A sample Visa-FTX debit card before Visa ultimately terminated the partnership agreement. Source:* *Yahoo Finance.*

While Visa’s 2022 annual report only included data up until Sept. 30 — about five weeks before FTX collapsed — more information may be revealed in Visa’s Q1 2023 earnings call on Jan. 26.

Visa President Ryan McInerney will officially replace Al Kelly as CEO on Feb. 1, while Kelly will remain on board as executive chairman.

McInerney appears to be equally, if not more bullish on blockchain-powered payment solutions too.

In an interview with Fortune in November 2022, McInerney said Visa still has “$14 trillion of cash out there being spent by consumers that can be digitized” and that they’re continuing to explore where crypto payments may be best leveraged.

Meta reportedly plans ‘large-scale layoffs,’ but what of its metaverse division?

November 7, 2022 Coin Telegraph

artificial intelligence

As of the end of September, Meta had more than 87,000 employees — a large proportion of which is said to work in the Reality Labs division.

Social media and tech giant Meta is reportedly gearing up for “large-scale layoffs” this week amid rising costs and a recent collapse of its share price.

According to Wall Street Journal (WSJ) report on Nov. 6 citing people familiar with the matter, the planned layoffs could impact thousands of employees in a broad range of divisions across Meta’s 87,000-strong workforce.

It is not currently understood whether the firm's Reality Labs division, which registered a $3.7 billion loss in the third quarter, would see staff cuts.

Last week, Meta CEO Mark Zuckerberg said that the company would be focusing its investment on “a small number of high-priority growth areas," including its Artificial Intelligence (AI) Discovery Engine and its advertisement and business messaging platforms in addition to the Metaverse, stating:

“So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year [...] In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”

During the earnings call, the billionaire entrepreneur appeared to double down on the firm’s investments in these areas, saying he believes they’re “on the right track with these investments” and should “keep investing heavily in these areas.”

The report comes only a week after Meta reported its third-quarter earnings, which missed revenue expectations and saw a rise in its operating costs. Its stock price also took a battering, with shares in Meta currently priced at $90.79 — down 7.56% over the last five days and 73.19% year-on-year, according to Yahoo Finance.

The company appears to still be actively hiring into its metaverse division regardless, with its list of job openings revealing 38 of its 413 listings are related to Augmented Reality and Virtual Reality.

Cointelegraph has reached out to Meta for clarification and whether there would be any changes to its metaverse division but did not receive an immediate response.

Google feels the bear market as crypto ads revenue slips since July

October 26, 2022 Coin Telegraph

Advertising

Alphabet’s revenue from Google advertising was down in Q3 2022, with decreased search spending from financial services and cryptocurrency subcategories highlighted.

The latest earnings call from Google’s parent company, Alphabet, highlighted decreased search advertising spending from financial services and cryptocurrency subcategories.

Alphabet released its earnings report for Q3 on Oct. 25, outlining a 6% increase in revenue totaling $69.1 billion in comparison to Q3 last year. Revenues were down slightly from Q2 2022, dropping from $69.7 billion.

However the breakdown of revenues from Google Services, which includes its advertising earnings, showed that this segment increased from $58.8 billion to $61.3 billion over the past year.

Philipp Schindler, Google’s chief business officer, noted particular strife in the financial and the cryptocurrency sectors in particular with notable drops in advertising spending quarter-on-quarter during Alphabet’s earnings call on Oct. 25:

"We did see a pullback in spending by some advertisers in certain areas in search ads. For example, in financial services we saw a pullback in insurance, loan, mortgage and crypto subcategories."

Google updated its financial products and services policy in July 2022 to clarify the scope and requirement for adverts relating to cryptocurrency businesses, services and products. This set out rules for advertisers of exchanges and wallet services targeting countries including France, Germany, South Korea, the Philippines, the United Arab Emirates, Hong Kong and Thailand.

Given that they met certain regulatory requirements within these jurisdictions, advertisers could continue to promote their crypto-related products and services through Google’s advertising platform.

The change came several months after Google gave crypto-related advertising the green light in August 2021. The multinational tech giant had previously banned crypto and initial coin offering-related advertisements back in June 2018.

Global markets and cryptocurrency markets continue to weather difficult times, with the latter enduring what analytics firms like Glassnode have dubbed as the worst bear market on record.

Nevertheless the decreased advertising spending from the cryptocurrency sector does not reflect Google’s attitude towards the space. Google announced a partnership with American cryptocurrency exchange Coinbase in October to allow payments for cloud services with Bitcoin and Ether in 2023.

GameStop doubles down on crypto amid a new partnership with FTX US

September 8, 2022 Coin Telegraph

bahamas

After launching an NFT marketplace and wallet with the help of Immutable X, GameStop is continuing its push into crypto following a partnership with FTX.

Gaming retailer GameStop is partnering with United States crypto exchange FTX US to bring more customers to crypto and work together on online marketing initiatives.

In a Sept. 7 statement, the gaming retailer noted that the new partnership will introduce GameStop’s customers into the FTX ecosystem, including its marketplaces for digital assets, while also seeing the retailer become FTX’s “preferred retail partner in the United States.”

The partnership will also see certain GameStop retail stores carrying FTX gift cards. As of Aug. 31, there are 2,970 GameStop stores across the United States.

In its Q2 earnings call, GameStop CEO Matt Furlong said the new deal is aimed at establishing something “unique” in the retail space.

The deal we just announced with FTX is a by-product of our commerce and blockchain team, working hand-in-hand together to establish something unique in the retail world.

GameStop did not disclose the financial terms of the partnership in its statement.

News of the new partnership came on the same day that GameStop released its financial results for the quarter that ended July 30, 2022.

Despite GameStop reporting a nearly 4% decline in net sales to $1.14 billion in the quarter, shares in GameStop managed to rise nearly 12% in after-hours trading following the news, reaching $26.84 per share.

GameStop has significantly ramped up its Web3 efforts this year after unveiling an NFT and Web3 gaming division in January, as well as the launch of its NFT marketplace on Jul. 11 in partnership with Ethereum (ETH) scaling solution Immutable X.

Furlong noted during the earnings call that the launch of its marketplace “supports GameStop’s pursuit of long-term growth in the cryptocurrency, NFT and Web3 gaming verticals” which they expect to be increasingly important for gamers and collectors.

The marketplace is a “non-custodial, Ethereum Layer 2-based marketplace” which allows users to connect their own digital asset wallets, like the recently launched GameStop Wallet.

GameStop noted that sales attributable to its digital collectibles were $223.2 million in the quarter, representing a nearly 26% increase compared to the $177.2 million worth of sales in the prior year period.

According to DappRadar, the marketplace has seen a volume of $21.26 million traded on it since its launch. Activity on the marketplace has slowed dramatically since its launch, with only $922,350 worth of activity occurring on the marketplace within the last seven days.

Meta’s Metaverse Is Still Not Profitable: Reality Labs Unit Registers $2.8 Billion Losses During Q2

July 29, 2022 Bitcoin.com

Square Enix to Reinforce Blockchain Bet, According to Latest Earnings Report

May 17, 2022 Bitcoin.com

Coinbase CEO has ‘never been more bullish’ even after $430M Q1 loss

May 11, 2022 Coin Telegraph

Coinbase CEO has ‘never been more bullish’ even after 0M Q1 loss

Brian Armstrong

“There are so many customers beating a path to our door that we have to have all hands on deck just to keep everything running,” Coinbase CEO Brian Armstrong explained on earnings call.

Cryptocurrency exchange Coinbase has disclosed its first net loss as a public company of $430 million in Q1, but CEO Brian Armstrong said on an earnings call that he's “never been more bullish on where we are as a company.”

In its first quarter 2022 report Coinbase disclosed that revenue had dropped 27% to $1.17 billion, down from $1.6 billion in the first quarter of 2021 and a long way off its Q4 2021 revenue of $2.5 billion. Monthly transacting users also dropped by over 19% to 9.2 million, from last quarter's 11.4 million.

Shares of Coinbase had already fallen by over 16% to close at $73 over the day, and after the earnings disclosure after hours trading saw the price fall further to $61 at the time of writing. Coinbase's shares have been on a steady fall since November 2021 where it almost reached the $380 high from its initial public offering in April last year.

Despite the figures, Armstrong explained why he was still optimistic on an earnings call:

“There are so many customers beating a path to our door that we have to have all hands on deck just to keep everything running, so the down periods are often sometimes kind of a welcome change from that in the sense that we get to focus on building the next layer of innovation that will benefit us in the next cycle.”

Armstrong said that the company was “greedy when others are fearful”, acquiring talent and focusing on projects and infrastructure for the future. Addressing what he called the “elephant in the room” of the company earnings downturn, he said:

“The broader markets are down. We're seeing a downmarket for growth tech stocks and risk assets, Coinbase and crypto is no exception to that. The good news is as a crypto company we've lived through many different cycles in crypto, including major draw downs, which I think make us well suited to operate through these environments.”

He reminded shareholders of a prospectus released by the company a year ago which stated it aimed to grow crypto adoption long term, operating the company at a rough break even.

In its shareholder letter Coinbase mentioned its recent non-fungible token (NFT) market launch as an area it was focusing more on in a bid to become a market leader in the space and its ambition to develop its platform as an “on-ramp to the cryptoeconomy”.

Armstrong stated that 54% of the platform's active users are doing something other than crypto trading, but didn’t clarify what activities and made no mention of the new NFT marketplace in his opening statement.

When asked specifically if the company is pleased with the activity in its NFT marketplace, Armstrong said it doesn't share “metrics on any of our new initiatives” adding that “there's a lot to build and the opportunity in the NFT space is enormous.”

The first day of the public opening of the marketplace saw only $75,000 in transaction volume taking place across 150 transactions according to on-chain metrics, a small percentage of the over 8 million email addresses which signed up for the waitlist.

Finishing his opening address Armstrong said the industry was in its early days and Coinbase sees the opportunities ahead adding that “regardless of whether the market is up or down, we're going to keep building.”