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Greenidge Generation Holdings, the parent company of upstate New York-based bitcoin mining firm Greenidge, expects to go public in the U.S. through a merger deal. 

The bitcoin mining firm announced the merger plan on Monday, saying it has signed a definitive agreement to merge in a stock-for-stock transaction with NASDAQ-listed customer service solution provider Support.com, subject to the latter’s shareholder approval and other closing conditions.

Greenidge operates self-mining farms in the U.S powered by its proprietary nature gas-based power plants that currently have allocated 19 megawatt out of its 106 megawatt capacity for bitcoin mining.

The firm boasts 1.1 exahashes per second of computing power and has mined 1,186 BTC for 12 months as of February 28 at a cost of about $2,869 per bitcoin. It projects more $50 million in earning before interest, taxes, depreciation and amortization for 2021.

As part of the deal, Support.com, with a $41 million in market capitalization on NASDAQ, will become a wholly-owned subsidiary of Greenidge upon closing of the proposed transaction, which is expected to conclude in Q3 this year. 

“This merger is an important next step for Greenidge as we build upon our existing, integrated and proven platform for bitcoin mining and generation of lower carbon affordable power,” said Greenidge’s CEO Jeff Kirt. 

“This transaction will build upon Greenidge’s successful business by providing them with additional cash funding and a public currency to fund their growth plans, as well as important new capabilities including customer interface, security software, and privacy expertise,” Support.com’s president and CEO Lance Rosenzweig added in the statement.

As part of the merger plan, Support.com is set to provide Greenidge with an estimated $33 million in cash.

Greenidge said it aims to scale up its bitcoin mining capacity to 41 megawatt by the end of June. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

An official of the People’s Bank of China (PBoC) has said a “completely anonymous central bank digital currency (CBDC) is not an option” based on international consensus.

Mu Changchun, the head of the Chinese central bank’s Digital Currency Research Institute, said in a forum on Saturday that the so-called “controllable anonymity” is at the core of China’s digital yuan design. 

It’s also the first time that the PBoC openly confirmed and elaborated at length the use of digital yuan not only as a payment method but also a high-level financial surveillance tool.

“The precondition of CBDC’s anonymity is it being risk-controllable and limited. A fully anonymous CBDC is not practical,” Mu said. He added that the controllable anonymity is also based on international consensus. Any design that doesn’t satisfy anti-money laundering, anti-terrorism financing and anti-tax evasion purposes will be simply vetoed, he said. 

According to Mu, the digital yuan’s controllable anonymity feature means privacy only applies to end users when they transact among themselves while the details of those transactions remain visible to the central bank and regulators.

His remarks confirmed The Block’s report last year that the authorized patents filed by the PBoC suggested the technological intention of the digital yuan being a financial tracking tool.

Mu said there will be severe consequences if the design of China’s digital yuan over-emphasizes on users’ privacy and ignores its capability in financial surveillance on criminal activities. Mu cited the wide use of Tether’s USDT and bitcoin by criminals in laundering proceeds gathered from illegal economic activities such as drug dealing and online gambling.

It was reported last week that China’s extensive crack-down on internet crimes has sentenced nearly 100 people to serve behind bars since November for laundering proceeds using USDT via crypto over-the-counter desks worth more than $30 million. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

SEC commissioner Hester Peirce remarked during a virtual conference appearance last week that “evidence-based rulemaking is not yet the norm in crypto-regulation” as part of a wider exploration of the topic.

Peirce spoke on March 15 during an event organized by the British Blockchain Association. According to a transcript of her speech, Peirce once again outlined an expansive and positive viewpoint on cryptocurrencies, noting in her speech authorities perhaps spend too much time focusing on the “illicit” use of the technology compared to its potential benefits.

“Perhaps, government officials should pause to consider the flip side of crypto—its value in protecting people from illicit activity,” Peirce said. “Because of its ability to reach people without intermediaries and its ease of storage, transport, and access, crypto can be an important part of the survival story of people living under the threat of harm by their families, people in their communities, or repressive governments.”

This line of thinking, according to Peirce, is reflective of a broader issue in the realm of crypto regulation in the U.S. today:

“The disproportionate focus on illicit uses and the underestimation of the protective uses of crypto is one example of how evidence-based rulemaking is not yet the norm in crypto-regulation. We can do better, and I hope that this year will mark a turning point for the United States, which in turn may spur other countries similarly to take a more sensible approach to crypto regulation. The SEC faces several challenges and corresponding opportunities in regulating blockchain-based assets and technologies. While the specifics will not be the same for other jurisdictions, some of the general regulatory principles likely are applicable despite jurisdictional differences.”

As might be expected, Peirce honed in on bitcoin exchange-traded products during her speech, an area of significant interest given the growing number of companies attempting to gain approval from the SEC and the past reluctance from the U.S. securities regulator to give the nod to such products. Today’s scrutiny comes as bitcoin ETPs gain traction in Canada and abroad.

She critiqued “ever-moving goalposts” in the SEC’s consideration of bitcoin ETPs, noting that such conditions are “unfair to innovators who spend ever-increasing amounts of money on attorneys and quantitative experts only to find that they have failed to hit a target that has moved once again.”

“Regulators should commit themselves to providing regulatory clarity so that traditional financial market participants can engage with crypto with confidence that they are complying with their regulatory obligations,” she later said.

The speech suggests Peirce holds the view that growing interest from institutional investors will become a growing pressure point on the SEC in its decision-making on crypto issues.

As she told event attendees:

“The pressure on us to grapple with the difficult questions through rulemaking and guidance will intensify rapidly along with institutional interest in crypto. Legacy financial institutions and traditional investors that have sat on the sidelines until now are likely to push us to allow them to play a more active role. Meanwhile, some crypto-native firms are now large companies that are woven into the fabric of the broader economy and so also will command more regulatory attention.”

“A final regulatory lesson then is that the regulatory work is only just beginning,” she went on to say.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A group of researchers writing for the Bank of International Settlements released a paper last week that explores the implications of central bank digital currencies (CBDCs) and how varying approaches to these emerging technological applications could improve conditions for cross-border payments.

To be sure, the paper comes as the majority of central banks hold an R&D-centric posture when it comes to CBDCs. But widening tests in China and the launch of the so-called Sand Dollar in the Bahamas last October are signals that such initiatives are likely to continue to grow in number.

The paper — “Multi-CBDC arrangements and the future of crossborder payments” — digs into the wonky details of how CBDC systems, especially those involving multiple currencies within a single framework — could ease some of the long-standing issues around cross-border payments, including AML/KYC regulations, slow processing times, and outdated technology. 

Notably, the paper’s authors position such approaches against the emergence of stablecoins — private digital currencies pegged to fiat currencies like the U.S. dollar — writing that “[m]ulti-CBDC arrangements are preferable to proposals that involve the creation of a global private sector global stablecoin. Instead, they look to foster a diversity of convertible national currencies and strengthen monetary sovereignty in the digital age.” 

But in order for any benefits from a multi-currency CBDC system to be realized, central banks will need to collaborate, per the report’s authors.

Once again, such collaboration is positioned in the context of competition with stablecoins. As the authors note:

“Coordinating early and openly can help central banks in identifying unintended barriers. This will aid efficiency. Yet for those central banks aiming to avoid competition from global stablecoins, it is a question of safety. A positive way to prevent widespread use of private global currencies is by fostering an efficient and convenient way to convert currencies.”

“A CBDC, compatible with others and benefiting from a diverse and competitive market for services, would be a real public good. To achieve this, central banks will need to collaborate,” the report concludes.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A pair of finance firms — First Advisors and the Anthony Scaramucci-led SkyBridge Capital — have joined the growing chorus of companies trying to win approval for a bitcoin exchange-traded fund in the United States.

The prospectus for the First Trust SkyBridge Bitcoin ETF Trust was published on Friday. As noted in the document, “[t]he investment objective of the Trust is for the Common Shares to reflect the performance of bitcoin less the Trust’s liabilities and expenses.” First Advisors serves as the advisor to the trust, with SkyBridge as sub-advisor, per the filing.

The First Advisors/SkyBridge effort represents the fifth initiative of its kind to be filed in recent days. The two companies join NYDIG, Valkyrie, WisdomTree and VanEck, though to date VanEck is the only application to be officially acknowledged by the SEC. 

Beyond the borders of the U.S., other efforts to create bitcoin ETFs have advanced. 

This week, news broke that Brazil will play home to a bitcoin ETF by way of B3, the country’s main stock exchange. QR Asset Management announced that it had won approval from securities regulators in the country, paving the way for an ETF launch that could come as soon as this summer. 

In Canada, a series of bitcoin ETFs have won approval. Those successes have led some observers to speculate that U.S. securities regulators may break their years-long opposition to such products. The coming months will reveal if that is the case. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Fortress Investment Group is offering creditors of infamous defunct crypto exchange Mt. Gox an early payout ahead of a vote on a proposal that could remunerate them in mid-2022. 

As per a letter obtained by The Block, the investment firm—which is known for its investments in private equity and stocks—is willing to pay up to 80% of what creditors are owed. Creditors, which have been waiting on a pay-out for years after Mt. Gox shuttered in 2014, could also receive 90% of the value of their claim under a proposal overseen by the trust managing the defunct exchange’s liabilities.

Still, Fortress estimates payments under that proposal—which will be voted on in October—may not be issued until 2022. Here’s a passage of the letter, which was penned by Fortress managing director Michael Hourigan:

“The Mt Gox Trustee recent published a Civil Rehabilitation plan which may allow creditors to receive a payout in mid-2022,” Hourigan wrote. “Our attorney’s estimate that this distribution would occur in mid-2022.”

“Rather than waiting another 1 to 1.5 years, we are offering a liquidity option for creditors who want to receive cash or BTC now,” Hourigan said. 

The firm has set aside $100 million to purchase these claims, betting that Mt Gox’s thousands of creditors would prefer a payout on the coins they’re owed now at a slight discount.

Payouts by Fortress are based off a calculator built by Kim Nilsson to help Mt Gox creditors estimate their mid-2022 payment.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Coinbase has settled with the Commodity Futures Trading Commission, according to a Friday announcement, and will pay a $6.5 million penalty.

The settlement focused on two areas: information about trade activity on Coinbase’s GDAX trading platform and allegations of wash trading by a Coinbase employee during a six-week period in 2016.

The U.S. regulator said that “between January 2015 and September 2018, Coinbase recklessly delivered false, misleading, or inaccurate reports concerning transactions in digital assets, including Bitcoin, on the GDAX electronic trading platform it operated.” 

The issue was tied to two features of its institutional-focused exchange at the time, GDAX, that helped it interact with Coinbase’s retail consumer platform.

One feature, Hedger, projected how much inventory the firm would need from its institutional exchange GDAX.  Transfers between the two venues would be reported as trade volume, which the CFTC deems as erroneous reporting. Furthermore, another feature, dubbed Replicator, would replicate the depth of the primary order book for a specific asset across order books in other pairs. The firm never disclosed these features to its clients, according to the CFTC. 

“According to the order, transactional information of this type is used by market participants for price discovery related to trading or owning digital assets, and potentially resulted in a perceived volume and level of liquidity of digital assets, including Bitcoin, that was false, misleading, or inaccurate,” the CFTC said. 

Additionally, the regulator honed in on alleged wash trading that took place on the platform.

“The order also finds that over a six-week period—August through September 2016—a former Coinbase employee used a manipulative or deceptive device by intentionally placing buy and sell orders in the Litecoin/Bitcoin trading pair on GDAX that matched each other as wash trades. This created the misleading appearance of liquidity and trading interest in Litecoin. Coinbase is therefore found to be vicariously liable as a principal for this employee’s conduct,” the CFTC said in its statement.

As the consent order further explained:

“On some days, Employee A’s wash trades in the Litecoin/Bitcoin trading pair between accounts he owned and controlled, made up a substantial percentage of the trading volume in the contract, ranging from as little as 0.62% to as much as 99.0% of the daily trading volume.” 

Per the consent order, which is embedded below, Coinbase did not admit to or deny the CFTC’s findings.

Word of the CFTC inquiry was featured in the company’s S-1 filing, published last month ahead of its planned direct listing. In the filing, Coinbase said that in July 2017, the agency “commenced an investigation that has covered topics including an 2017 Ethereum market event, trades made in 2017 by one of the Company’s then-current employees, the listing of Bitcoin Cash on the Company’s platform, and the design and operation of certain algorithmic functions related to liquidity management on the Company’s platform.”

CFTC commissioner Dawn Stump commented on the settlement in a concurring statement, stressing the desire “to ensure the public is not misled to believe that the CFTC regulates exchanges such as Coinbase. It does not.”

Stump effectively took the agency to task for its investigation, and went on to write that “the charges against Coinbase being brought and settled by the Commission are based largely on conduct that is several years old.”

“While I concur in the findings and terms of the settlement Order before us today, I question whether the Commission has fulfilled the foregoing responsibilities in this case,” she concluded.

Enf Coin Base Order 031921 by MichaelPatrickMcSweeney on Scribd

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Zora, the company behind an Ethereum-based marketplace for tokenized product drops, has received an investment from Paradigm.

Fred Ehrsam, the co-founder of the crypto VC firm, announced the news on Twitter Thursday evening. The terms of the deal were not disclosed.

Paradigm’s investment comes one year after Zora first left stealth mode and debuted its marketplace. As The Block reported at the time, the marketplace employs a dynamic pricing mechanism, allowing for the rise and fall of prices depending on how much interest a particular work attracts. The underlying concept of Zora is for creators to be able to capture some of the value their work receives on the secondary market. 

In a blog post, Ehrsam effectively positioned Paradigm’s stake as a bet on the future of non-fungible tokens or NFTs. NFTs are unique pieces of blockchain-based data linked to a digital product or creation. They’re undergoing what could be described as a mainstream moment, garnering coverage in major newspapers and prompting a range of popular figures to jump in amidst the attention and hype. Data collected by The Block Research illustrates the jump in activity in recent weeks.

But according to Ehrsahm, “NFTs are early in their evolution.”

He went on to contend:

“Just as much of the best online media could hardly have been imagined in the early days of the internet (who would have thought watching other people playing video games would be such a big business?), the same will be true of NFTs, both as a form factor and as a foundation for new types of applications. Crypto is rapidly creating the infrastructure for the metaverse. Zora is a key piece of that infrastructure, enabling experiences and worlds that seem unimaginable today.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Computing hardware maker Advanced Micro Devices (AMD) has no plans to follow rival Nvidia in limiting the use of its GPU products for cryptocurrency mining.

PC Gamer reports that the comments came during a pre-briefing call about AMD’s Radeon RX 6700 XT graphics card. Graphics cards are used to mine certain cryptocurrencies, including Ether, the native cryptocurrency of the Ethereum network. 

“We will not be blocking any workload, not just mining for that matter,” AMD product manager Nish Neelalojanan told the publication. 

AMD’s decision stands in opposition to Nvidia, which aimed to limit 50% of the processing power behind its latest chip, the RTX 3060 GPU, if it was used to mine ETH or other cryptocurrencies. However, Nvidia briefly stymied its own efforts by accidentally published a driver that removed the restriction in question. 

GPU demands from both crypto miners and gamers have historically led to shortages of the latest graphic chips. Gamers have long griped about the lack of availability of the latest cards, and Nvidia’s move was seen as a nod toward those critics. Nvidia is also moving to launch a product specifically dedicated to crypto mining in the coming months.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• The gains made by publicly listed mining stocks in recent months have far outstripped those of bitcoin in percentage terms — and the losses tend to be steeper when BTC is dropping.
• How are investors valuing these stocks? How should they be?

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