Coinbase's Convertible Key Strategy, Core Combination Strategy versus Block's Bitcoin Gameplay
The proposed $9 billion all-stock merger between cryptocurrency mining giant Core Scientific and CoreWeave, Inc., is currently in a state of flux, with significant opposition from one of Core Scientific's largest active shareholders, Two Seas Capital.
Two Seas Capital, holding over 6% of Core Scientific's shares, has publicly criticized the deal, deeming it an undervalued and risky proposition for Core Scientific shareholders due to the uncollared all-stock structure that exposes shareholders to volatility in CoreWeave’s share price.
Two Seas Capital Urges Shareholders to Vote Against the Deal
In a move to protect Core Scientific's long-term strategic value, Two Seas Capital is urging other shareholders to vote against the merger deal. They argue that the terms heavily favor CoreWeave and underestimate Core Scientific’s data center infrastructure and positioning in high-performance computing for AI workloads.
The 30% decline in Core Scientific’s stock price post-announcement has reinforced Two Seas Capital’s concerns, and they have threatened to initiate a proxy fight if better terms are not negotiated.
Market Speculation and Analyst Commentary
There is market speculation and analyst commentary suggesting that if CoreWeave's stock price does not recover before the shareholder vote expected in Q4 2025, the merger may be renegotiated or possibly fail to close. Jefferies, for example, sees Core Scientific’s fair value significantly higher than what the deal pricing implies and has recommended a higher exchange ratio to reflect this.
The Future of the Merger
As of now, the merger is still pending and scheduled for a shareholder vote in Q4 2025. The current status of the deal is uncertain, with the potential for renegotiation or even failure depending on CoreWeave’s stock performance.
Other Notable Developments in the Cryptocurrency Sector
- Coinbase is raising $2 billion in convertible notes for acquisitions and general corporate purposes.
- The crypto exchange Bullish formally registered its initial public offering with the SEC, aiming to raise $629 million at a valuation between $3.8 and $4.2 billion.
- Block Inc. added 108 Bitcoin to its corporate holdings, bringing its total to 8,692 BTC, worth approximately $1 billion at the current price.
- Circle, the USDC issuer, is a few months into its tenure as a publicly traded company.
- DeFi Dev Corp bought $18 million worth of Solana, bringing its total holdings to 1.23 million SOL.
- Coinbase has rolled out decentralized exchange trading in its app for its U.S. users.
- Jack Dorsey, CEO of Block Inc., hinted at more Bitcoin news during yesterday’s earnings call, specifically about Proto, the company’s Bitcoin mining initiative.
- The revenue of Coinbase dropped by 25% in Q2, causing concerns among some analysts. Compass Point moved Coinbase from the Neutral to Sell column due to the revenue miss.
- Proto has a deal locked in to sell its Bitcoin mining chips to Core Scientific in one of the largest ASIC agreements ever signed.
- The GENIUS Act, a stablecoin-regulating act, has been signed into presidential ink.
- Block Inc. generated $2.14 billion in revenue from Bitcoin sales in Q2, a slight slowdown from Q1's $2.3 billion.
- Subscriptions and services, which include Coinbase One memberships, stablecoin revenue, staking, and custody services, did not contribute enough to offset the revenue drop, according to analysts.
- Two Seas Capital believes Core Scientific has the potential to build "critical, high-performance computing infrastructure at scale."
- Digital asset treasuries are proliferating.
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