El Salvador continues to make news as the first country – and maybe not the last – to make a cryptocurrency its legal tender. Bitcoin has become the de facto currency of El Salvador, as pledged by the country’s president earlier this year.
To make good on that pledge, the country’s president, Nayib Bukele, just announced that it has purchased 200 bitcoins, and plans to make more purchases ahead.
This is important for the crypto marketplace because it highlights how much demand could come from underappreciated corners of the world. If this works out well for El Salvador, one could image 50 other non-OECD nations making a similar decision. If that happened, Bitcoin would be untouchable as far as any future attempt to undermine it from the standpoint of the traditional geo-political financial established – ie, the world’s major governments, banks, and central policymakers.
This has been an ever-present risk for Bitcoin since it was born – it represents a threat to banks and tax collectors everywhere because it has the potential to disintermediate “the system”.
But each step of the way as its institutional roots spread, that outcome becomes more marginalized in the outcome distribution, making it easier and easier to HODL and invest further resources in.
This latest story is a piece of that puzzle, as is Facebook’s announcement that it is getting into the NFT game. These stories will have implications for key stocks in the space this week. And we take a closer look at some of the more interesting catalysts and plays coming in.
Square Inc (NYSE:SQ) is a cohesive commerce ecosystem that helps sellers start, run, and grow their businesses. The firm’s sellers download the Square Point of Sale mobile app, they can quickly and easily take their first payment, typically within minutes. Its system, sellers gain access to features such as next-day settlements, digital receipts, payment dispute management, data security, and Payment Card Industry compliance.
The firm offers additional point-of-sale services, financial services, and marketing services.
Square Inc (NYSE:SQ) recently announced it has entered into a Scheme Implementation Deed under which Square has agreed to acquire all of the issued shares in Afterpay by way of a recommended court-approved Scheme of Arrangement. The acquisition aims to enable the companies to better deliver compelling financial products and services that expand access to more consumers and drive incremental revenue for merchants of all sizes.
“Square and Afterpay have a shared purpose. We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles,” said Jack Dorsey, Co-Founder and CEO of Square. “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week.
Square Inc (NYSE:SQ) managed to rope in revenues totaling $4.7B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 143.3%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($5.6B against $5.6B, respectively).
ISW Holdings (OTCMKTS:ISWH) is a striking up-and-comer in the crypto space. ISWH – which is in the process of changing its name to “BlockQuarry” – came out this morning with a message to provide more details on its recent landmark deal with Bitmain Technologies, the world’s leading producer of cryptocurrency mining hardware and a leading global cryptocurrency mining firm.
In the release, the company noted that the deal will involve 56,000 Bitmain mining rigs pairing with 200 MW of power at the Company’s “POD-CITY” location in Georgia. The timeline set according to the Agreement calls for having the first 20 MW of power paired with rigs and running full-out by Q4 2021, and having all 56k miners hooked up to all 200 MW of power and running full-out by Q4 2022. However, management is eager to complete these milestones well ahead of established deadlines.
ISW Holdings (OTCMKTS:ISWH) also estimated that this full complement running at full capacity will be capable of driving estimated annual revenues well in excess of $100 million (over $10 million per month) for ISW Holdings/BlockQuarry in hosting service fees. This is not contingent upon cryptocurrency pricing.
According to the release, the partnership is tripartite, between Bitmain, ISW Holdings, and Bit5ive. Bitmain will bring mining machines, capital, and expertise into the bargain, consuming hosting services and power up to and potentially in excess of 200 MW for a five-year period, subject to counterparty contingency terms. Bit5ive will bring power, hosting services, project management services, and expertise to the table. And ISW Holdings will provide funding, expertise, hosting services, mining services, access to power, and access to public market investors.
For ISW Holdings, the cost for the entire roll-out to setup and activate mining machines using 200 MW of power will be a total of $62 million. $6 million of this has already been paid. $56 million remains.
ISW Holdings (OTCMKTS:ISWH) President and Chairman Alonzo Pierce noted: “The nature of our business changed significantly last summer when we partnered with Bit5ive and began designing state-of-the-art mining pods with a bold vision and a deep conviction in the value proposition of the cryptocurrency marketplace. Now, just a bit over a year later, we are on the verge of becoming one of the top players in the cryptocurrency world after bringing Bitmain to the table in a deal that will see all parties unlock significant value. Looking ahead, our hosting service revenues will be stable and substantial, and capable of strong growth. And our mining revenues will fluctuate with prices in the cryptocurrency space. That will give us a strong foundation and enormous growth with a significant non-volatile component. This should put us in position to meet requirements to migrate shares to a major national listed exchange in due course. We have a number of additional catalysts in the works as well, and I look forward to providing more insights in the very near future.”
Paypal Holdings Inc (NASDAQ:PYPL) has become a key player on the crypto landscape since announcing it would allow customers to transact in coins late last year. The company engages in the development of technology platform for digital payments. Its solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and Paydiant products. The firm manages a two-sided proprietary global technology platform that links customers, which consist of both merchants and consumers, to facilitate the processing of payment transactions.
It allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. The firm also enables consumers to exchange funds with merchants using funding sources, which include bank account, PayPal account balance, PayPal Credit account, credit and debit card or other stored value products.
Paypal Holdings Inc (NASDAQ:PYPL) recently announced it will no longer charge late fees for missed payments on buy now, pay later products globally. Starting October 1, new customer purchases with Pay in 4 in the United States, Pay in 3 in the United Kingdom, and Pay in 4X in France will no longer be subject to late fees – joining PayPal’s buy now, pay later solutions in Germany and Australia which do not charge late fees for missed payments.
According to its release, eliminating late fees builds on PayPal’s commitment to deliver the most customercentric, global installment solution portfolio that helps meet the needs of today’s consumers and merchants.
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 4% in that timeframe.
Paypal Holdings Inc (NASDAQ:PYPL) managed to rope in revenues totaling $6.3B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 21%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($12.4B against $41.3B, respectively).
In addition, there are several other key names in the space that should also be considered given the momentum in the group, including Overstock.com Inc (NASDAQ:OSTK), Marathon Digital Holdings Inc (NASDAQ:MARA), Riot Blockchain Inc (NASDAQ:RIOT), and Bit Digital Inc (NASDAQ:BTBT).
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