By Emily Bary
During recent cryptocurrency booms, companies have been quick to jump on the trend, whether by reorienting their entire businesses around the buzzy theme, building meaningful crypto features alongside more traditional operations or dipping their toes in the water to ensure they wouldn’t get left behind.
When times were good, companies liked to talk up their crypto involvement, however marginal. But with crypto prices now sagging, it’s worth taking stock of which companies were actually seeing meaningful contributions from their crypto efforts—and which could be in for some pain in a tough climate.
Bitcoin /zigman2/quotes/31322028/realtime BTCUSD +0.43% has tumbled 53% year to date through Friday afternoon trading, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.45% has lost 18.1%, and has plunged 68% from its record close in November 2021. The selloff comes after bitcoin had run up 60% in 2021 and rocketed 305% in 2020.
MarketWatch took a look at 13 companies with crypto exposure in various forms. Below we break down how digital assets affect those businesses.
Some companies are all about crypto…
|Coinbase Global Inc.||COIN||Coinbase is all in on crypto, generating the bulk of its revenue from trading and the rest from other crypto-related activities like staking and custodial services.|
|Marathon Digital Holdings Inc.||MARA||Once a patent company, Marathon now operates bitcoin mining rigs. In addition to generating its revenue from crypto mining, the company holds some of the bitcoin it mines as assets.|
|Riot Blockchain Inc.||RIOT||Like Marathon, Riot pivoted to bitcoin mining in recent years. The bulk of its revenue is from bitcoin mining, though it also generates hosting and engineering revenue. The company holds bitcoin on its balance sheet.|
Others are involved to a lesser extent
|Advanced Micro Devices Inc.||AMD||AMD chips have been used for crypto mining, but the company’s CEO said late last year said crypto was not a “meaningful driver” of the GPU business.|
|Block Inc.||SQ||The fintech company lets its Cash App users buy bitcoin through the mobile wallet. Bitcoin accounts for about 3% of gross profit.|
|Fidelity National Information Services Inc.||FIS||The merchant-acquiring company has said it served four of the top five crypto exchanges. A Baird analyst pegs crypto exposure at less than 5% of merchant-segment revenue.|
|Mastercard Inc.||MA||Mastercard has card offerings for crypto wallets looking to help customers convert crypto into fiat currency for quick spending. Baird estimates crypto represents “well less than 1% of total revenue.”|
|MicroStrategy Inc.||MSTR||The software company held about 129,699 bitcoins as of late June but acquired them at an average price considerably higher than current levels.|
|Nvidia Corp.||NVDA||Nvidia’s dedicated crypto-mining chip brought in “nominal” revenue in the latest quarter compared with $155 million a year earlier.|
|PayPal Holdings Inc.||PYPL||Like Block, PayPal lets users buy, sell, and hold cryptocurrency, but analysts see the company’s crypto exposure as less than Block’s.|
|Robinhood Markets Inc.||HOOD||The brokerage company generated 18% of revenue from crypto-related activity in its last-reported quarter.|
|Signature Bank||SBNY||As the “leading depository bank” for digital asset companies, Signature Bank had $29 billion in deposits from the digital-currency ecosystem at the end of the first quarter.|
|Visa Inc.||V||Like Mastercard, Visa works on card offerings with crypto exchanges and has various crypto-related services. Baird estimates that “well less than 1% of total revenue” comes from crypto.|
AMD and Nvidia
AMD /zigman2/quotes/208144392/composite AMD +1.36% and Nvidia /zigman2/quotes/200467500/composite NVDA +0.86% make chips that can be used for crypto mining, though the companies don’t explicitly break out how much revenue they get from such applications.
Nvidia said that revenue from its dedicated crypto-mining chip was “nominal” in its quarter, compared with $155 million a year before. The prior period’s $155 million crypto-revenue total would have been about 1.9% of the latest quarter’s (larger) overall revenue total, so Nvidia’s disclosure of a “nominal” contribution suggests crypto was an even smaller portion of overall revenue in the most recent quarter.
“The extent to which cryptocurrency mining contributed to gaming demand is difficult for us to quantify with any reasonable degree of precision,” Nvidia Chief Financial Officer Colette Kress said on the latest earnings call. “The reduced pace of increase in Ethereum network hash rate likely reflects lower mining activity on GPUs. We expect a diminishing contribution going forward.”
AMD executives didn’t mention crypto once on the company’s latest earnings call in May or during the analyst-day presentation in June, according to transcripts. When asked at a December investor conference how crypto was impacting the market for AMD graphics processing units in a period of tight supply, Chief Executive Lisa Su said “it’s a very different market than it was a few years ago with crypto” and that she didn’t see crypto as a “meaningful driver” of that business.
Nvidia declined to comment. An AMD spokesperson said that the company was in a quiet period, with earnings scheduled to be reported on July 26, and couldn’t comment beyond the historical statement referenced above.
Block Inc. /zigman2/quotes/205989440/composite SQ +0.51% has the greatest cryptocurrency exposure among traditional payment-technology names, as the company allows users to buy and sell bitcoin through its Cash App mobile wallet. Bitcoin buzz helped Block gain momentum amid strong trading interest in early 2021, and Chief Executive Jack Dorsey has been a vocal proponent of the cryptocurrency.
On paper, it might seem as if Block is hugely dependent on crypto activity: The company reported $10.0 billion in GAAP bitcoin revenue last year, accounting for about 57% of overall revenue. But the bitcoin revenue figure is misleading in Block’s case since it comes with minimal profit from the spread .
In general, Block executives and the analysts who cover the stock focus on gross-profit figures instead of revenue across the company’s business lines, and on that basis, bitcoin accounted for about 5% of company gross profit last year, or about 3% in the first quarter.
“They have a visibility issue more so than they have a fundamental issue,” Mizuho analyst Dan Dolev told MarketWatch. “There’s so much good stuff about [Block] that people are missing because of this bitcoin-centric [narrative].”
Block executives see bitcoin as an important driver for the Cash App. “Bitcoin monthly actives have brought in significantly more inflows to the ecosystem” than those who only use the mobile wallet for peer-to-peer money transfers,” Cash App Lead Brian Grassadonia said at the company’s May investor day. “It’s also a monetization lever where money isn’t actually leaving the ecosystem, so we have the opportunity to monetize those inflows multiple times.”
Bitcoin-mining companies, including Riot Blockchain Inc. /zigman2/quotes/209538617/composite RIOT -0.14% and Marathon Digital Holdings /zigman2/quotes/205886758/composite MARA +3.04% , are fully exposed to cryptocurrencies, as their businesses involve “finding and securing cheap and hopefully renewable power, buying lots of the best bitcoin mining rigs available, and keeping them cool,” notes D.A. Davidson analyst Chris Brendler.
Marathon Digital classifies all its revenue as mining-related, while Riot breaks out smaller portions that are from hosting and engineering. Other mining stocks include Core Scientific Inc. /zigman2/quotes/225826430/composite CORZ -2.23% and CleanSpark Inc. /zigman2/quotes/200030751/composite CLSK -0.30%
While some bitcoin mining companies began that way, others pivoted as cryptocurrencies turned trendy. Riot was once a tiny animal healthcare company, and Marathon was once a patent business.