Explainer-How China manages refined fuel exports


Workers are seen near pumpjacks at a CNPC oil field in Bayingol

By Chen Aizhu

Mon, August 15, 2022 

SINGAPORE (Reuters) - China's refined fuel exports are likely to sink in 2022 to the lowest in seven years as the country seeks to maintain ample domestic supplies while refinery output posts a rare decline.

Regional rivals like India and South Korea are the probable primary beneficiaries of China's export cuts, which allow them to step up to fill shortages in Europe and elsewhere after the Ukraine crisis strained global fuel markets.

HOW DOES CHINA'S QUOTA SYSTEM WORK?

Beijing manages exports of gasoline, diesel and jet fuel under a quota system, issuing several batches of allocations over a year and viewing product shipments to global markets as a tool to manage domestic supply and demand balances.

Most quotas go to state oil groups, including China National Petroleum Corp, China Petrochemical Corp, China National Offshore Oil Corp, Sinochem Holdings and China National Aviation Fuel Company. Mega refiner Zhejiang Petrochemical Corp is the only private company with export allowances.

Through 2019 the government specified quotas by product, but since then it has allowed exporters to decide what to export from a general allocation.

Exports of very low sulphur fuel oil, a marine fuel that meets International Maritime Organization standards, are managed under a separate quota system. Bunker fuel volumes from bonded zones - which are considered as exports - have been rising since 2020 as China works to build its eastern port of Zhoushan into a regional shipping fuel hub that rivals Singapore.

WHEN & WHY DID CHINA START TO CUT QUOTAS?

China's exports of diesel, gasoline and jet fuel peaked in 2019 at 55.4 million tonnes, with diesel accounting for nearly 40% of the total, according to Chinese customs data.

Total exports started trending lower from 2020 as the COVID-19 pandemic hit global fuel demand.

Beijing began adjusting its fuel export policy from late 2021, roughly reducing quota volumes by 40% so far in 2022.

The sharp reduction in exports was triggered by Beijing's concern over a domestic supply crunch similar to that for thermal coal which led to widespread power cuts.

The government is also keen to remove small, inefficient refining capacities to cut pollution and carbon emissions, and that has fed into China's lower throughput this year so far.

China's July refinery runs fell to their lowest in more than two years, data showed on Monday, with year-to-date volumes down 6.3% from a year earlier.

WHAT'S THE MARKET EXPECTATION FOR 2022 QUOTAS?

China has so far issued 22.5 million tonnes of quotas for the three main fuel products for this year, 40% below the corresponding period of 2021.

The second and third batches of quotas came only in June and July after refiners lobbied Beijing to help ease brimming domestic stocks amid COVID-19 disruption to fuel consumption.

That left China largely missing out on a bumper export market in the second quarter when Asian refining margins for diesel and gasoline hit record highs around $72 and $38 a barrel, respectively.

Domestic demand for diesel is set to rebound in September and October as China's harvest gets started and construction activities pick up, while a tax probe into independent refiners is expected to limit production of exportable fuel supplies during the rest of 2022.

(Reporting by Chen Aizhu; Editing by Tom Hogue)

Turquoise Hill Stock Plunges After Rejecting $2.7 Billion Rio Tinto Buyout Offer

“Oyu Tolgoi is an attractive tier one asset, and we remain highly focused on and optimistic about its transformation into one of the world’s great copper mines," Turquoise Hill said.

MARTIN BACCARDAX
AUG 15, 2022 6:12 AM EDT

Turquoise Hill Resources (TRQ) shares plunged lower Monday after the Canadian mining group rejected a $2.7 billion buyout offer from Rio Tinto plc (RIO) .

Turquoise Hill said Rio Tinto's offer of $C34 a share for the 49% stake it doesn't already own -- first unveiled in March -- undervalues the Montreal-based group, which focuses on copper and gold mining in the Oyu Tolgoi project in southern Mongolia.

Rio had been working with a so-called 'special committee' set up by Turquoise Hill to evaluate its $2.7 billion bid, but the group noted that engagement between the two parties "has not resulted in a consensus on value and price or in any improved proposal from Rio Tinto."

“The underground project is advancing better than originally anticipated. We were able to start blasting the drawbells ahead of schedule and caving operations are progressing to the point where we expect to achieve sustainable production earlier than forecast," said Turquoise Hill's interim CEO Steve Thibeault. "The funding agreement with Rio Tinto remains in effect and the Company is executing on those commitments, which we expect will provide us with sufficient liquidity to meet our funding requirements."

Crypto Exchange Coinify Obtains Regulatory Approval to Operate in Italy

Cameron Thompson
Mon, August 15, 2022 


Cryptocurrency exchange Coinify has obtained regulatory approval to operate in Italy, according to the Italian financial regulator’s website.

The Danish digital asset brokerage, currently licensed to operate in over 180 countries and territories, will offer its crypto trading and payments services in Italy after registering with the Organismo Agenti e Mediatori (OAM) on Aug. 12.

Italy has been significantly increasing its roster of crypto firms licensed to operate within the country. Just last month, Crypto.com, BitGo and Bitstamp all registered with OAM to offer their products and services in the country. Crypto exchanges Binance, Kraken and Bitpanda and brokerage Trade Republic have also registered recently.

Last August, crypto lender Voyager Digital acquired Coinify in an $84 million sale in stocks and cash, to bolster its crypto payments services. This past July, Voyager filed for Chapter 11 bankruptcy amid the crypto credit crisis.

THAT'S BILLION WITH A 'B'

Exclusive-Tencent plans to divest $24 billion Meituan stake -sources

By Julie Zhu and Kane Wu 

Tue, August 16, 2022 

HONG KONG (Reuters) -China's Tencent Holdings plans to sell all or a bulk of its $24 billion stake in food delivery firm Meituan to placate domestic regulators and monetise an eight-year-old investment, four sources with knowledge of the matter said.

Tencent, which owns 17% of Meituan, has been engaging with financial advisers in recent months to work out how to execute a potentially large sale of its Meituan stake, said three of the sources.

Technology giant Tencent, the owner of China's No. 1 messaging app WeChat, first invested in Meituan's rival Dianping in 2014, which then merged with Meituan a year later to form the current company.

Based on Meituan's market capitalisation as of Monday, Tencent's 17% stake is worth $24.3 billion.

Tencent is seeking to kick off the sale within this year if market conditions are favourable, said two of the sources.

The planned sale comes against the backdrop of a sweeping regulatory crackdown in China since late 2020 on technology heavyweights that took aim at their empire building via stake acquisitions and domestic concentration of market power.

The regulatory crackdown came after years of a laissez-faire approach that drove growth and dealmaking at breakneck speed.

Tencent has been reducing holdings partly to appease the Chinese regulators and partly to book hefty profits on those bets, said three of the sources. The value of its shareholdings in listed companies excluding its subsidiaries dropped to just $89 billion as of end-March from $201 billion in the same period last year, according to its quarterly reports.

"The regulators are apparently not happy that tech giants like Tencent have invested in and even become a big backer of various tech firms that run businesses closely related to people's livelihoods in the country," said one of the sources.

Shares of Hong Kong-listed Meituan fell more than 10% following the Reuters report while Tencent dropped more than 2% in Tuesday afternoon trade.

Tencent declined to comment. Meituan did not respond to a request for comment.

All the sources declined to be named due to confidentiality constraints.

Tencent announced in December the divestment of around 86% of its stake in JD.com Inc, worth $16.4 billion, weakening its ties to China's second-biggest e-commerce firm.

One month later, it raised $3 billion by selling a 2.6% stake in Singapore-based gaming and e-commerce company SEA Ltd, which was seen as a move to monetise its investment while adjusting business strategy.

Tencent has not pinned the sale of JD.com and SEA stakes on the regulatory crackdown.

The potential sale of the Meituan holding will likely be executed via a block trade in the public market which typically takes a day or two from marketing to completion, according to two of the sources.

It would be a fast and smooth way for Tencent to offload the shares, they added, compared to negotiating with a private buyer.

(Reporting by Julie Zhu and Kane Wu; Editing by Sumeet Chatterjee and Muralikumar Anantharaman)

Tencent Music's revenue beats view as more Chinese users pay for songs

Josh Ye and Tiyashi Datta
Mon, August 15, 2022 

FILE PHOTO: Illustration picture of China's Tencent Music Entertainment Group


(Reuters) -China's Tencent Music Entertainment Group bettered quarterly revenue estimates on Monday as a slate of original content helped its music streaming platform attract more paying users.

The company's U.S. shares rose 5.9% in extended trading after it said users who paid for online music jumped by a quarter to 82.7 million. Music subscription revenue of the platform that operates like Spotify rose 18%.

Tencent Music also benefited from a push for original content, including a partnership with parent Tencent Holdings to produce songs from popular game titles.

Its total revenue was 6.91 billion yuan ($1.02 billion) in the second quarter ended June 30, compared with the 6.62 billion yuan expected by analysts, according to Refinitiv IBES data.

Cheuk Tung Yip, Tencent Music's chief strategy officer, said in a call with analysts on Tuesday that the company will continue to build up its paywall to drive up revenue.

"We expect more content partners will be added to the paywall in the second half," he said, adding the company was also committed to catering to non-paying users, who help generate about 10% of its advertising revenue.

Tencent Music's overall revenue, however, fell 13.8% from the same quarter of last year, showing that stiff competition and an economic slowdown sparked by Beijing's zero-COVID policy were weighing on the music business.

Revenue also fell 20% in the social entertainment business - the company's biggest revenue driver and home to its karaoke app WeSing and live concert platform Kuwo Music.

Tencent Music has been in the crosshairs of regulators and was forced last year to end its exclusive contracts with big music labels, eroding its advantage against rivals such as Cloud Music and Bytedance-owned short-video sharing platform Douyin.

Yip, though, said the company is seeing a moderate recovery from advertisers in the second half in China as COVID-19 outbreaks in the big cities such as Shanghai and Beijing had been brought under control. He listed e-commerce, consumer staples and auto as industries experiencing growing demand.

Excluding items, Tencent Music earned 0.63 yuan per American depository share (ADS) for the quarter, above estimates of 0.56 yuan per ADS.

($1 = 6.7715 Chinese yuan renminbi)

(Reporting by Tiyashi Datta in Bengaluru; Editing by Aditya Soni and Muralikumar Anantharaman)

CONSUMERS INVESTING VIA SMART PHONE

Meme stocks are a 'self-containing loop,' market strategist explains

Mon, August 15, 2022 

Retail traders are back at it again — using a signature playbook to push meme stocks and other assets higher.

“The retail is back,” Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance live on Monday.

“The meme stocks I guess are the perfect tell for this. To a certain extent crypto coming back [Bitcoin] (BTC-USD) testing $25,000 is another tell.”

“A lot of people are using the 2020, 2021 playbook over again,” said Sosnick.

“It was a spectacular playbook for that period of time. But the rules of the game seem to be changing.”

Despite Fed concerns, uncertainty out of China, and questioning whether the markets are in a bear market rally, stocks like GameStop (GME), AMC (AMC) and Bed Bath and Beyond (BBBY) have been soaring recently. New names like Chinese tech firm AMTD Digital (HKD) have also surged. HKD and other stocks have acted more like swing trades.

Retail traders poured into names like GameStop and AMC in early 2021. They became the flagship meme stocks amid a period of high liquidity in the markets and looser monetary policy. But since then, the Federal Reserve has been hiking rates amid soaring inflation.

The markets went into bear market territory earlier this year, but have since come off their mid-June lows.

“For now the playbook is working,” said Sosnick. “But I have to wonder if using that same investment playbook that worked for you which includes ‘Don’t fight the Fed’ - which in that period of time the Fed was your friend — now the Fed is kind of a headwind."

Sosnick notes the meme stock rally nowadays has a "less organic nature to it."

"The initial meme stock craze you had people coming in who never invested before putting money into these stocks and investing. Now it seems to be the same cast of characters chasing the same list of names with a couple of new exceptions every so often," said Sosnick.

"That becomes more of a self contained loop," he added. “The meme stock trading works great if you’re early. It works terrible if you’re late."

NFT

Meme stock Bed Bath & Beyond soars

after investor Ryan Cohen's latest bet

Tue, August 16, 2022 

By Medha Singh and Bansari Mayur Kamdar

(Reuters) -Shares of Bed Bath & Beyond Inc surged 60% to a near five-month high in volatile trading on Tuesday, as retail investors flocked to the stock after a filing revealed activist investor Ryan Cohen's latest bet on the home goods retailer.

The stock rose as much as 78.8% to $28.60 during the session and trading was halted multiple times for volatility.

Cohen's investment vehicle RC Ventures, which is the second largest investor in the company and has added three independent directors to its board, bought call options expiring in January 2023 on 1.67 million shares with a strike price ranging from $60 to $80.

An option gives the buyer the right to buy or sell a security at a given price on a given date. Buying a call option is essentially betting the underlying asset will rise in price.

"You see his name (Cohen) associated and it gets the buzz going. So right now social media buzz is flying around Bed Bath and Beyond and it is spilling over other stocks as well," said Dennis Dick, retail trader at Triple D Trading.

The home furnishing company's shares were the most traded on brokerage Fidelity's platform, indicating interest from retail investors.

About 300 million shares changed hands by 2:30 p.m. ET, far outpacing the stock's 30-day moving average volume of nearly 29 million.

Trading in Bed Bath & Beyond, which has 50.7% of its public free float in short position, has triggered a short squeeze signal, according to analytics firm Ortex.

The stock is up 440% so far this month in a rally that is evocative of eye-watering gains in shares of GameStop and AMC Entertainment early last year that hurt hedge funds that had bet against the stock.

Other highly shorted stocks, meal-kit delivery firm Blue Apron, sports TV streaming co FuboTV, GameStop and barbecue grill maker Weber Inc jumped between 8% and 53%.

Bed Bath & Beyond opened lower on Tuesday after B. Riley downgraded the stock to "sell", saying the shares were trading at "unrealistic valuations."

(Reporting by Medha Singh, Bansari Mayur Kamdar and Sruthi Shankar in Bengaluru; Editing by Maju Samuel and Shinjini Ganguli)

Morgan Stanley makes big bet on meme-stock Revlon


David Randall
Mon, August 15, 2022 

Revlon products are seen for sale in a store in Manhattan, New York City

By David Randall

NEW YORK (Reuters) - Shares of bankrupt cosmetics company Revlon Inc soared nearly 27% on Monday after asset manager Morgan Stanley revealed in a filing that it purchased 400,650 shares in the company over the last quarter.

The purchase increased Morgan Stanley's stake by approximately 1,793%, according to its filing, known as a 13-f.

Shares of Revlon are up 582% from their mid-June low, boosted by hopes the company can replicate the success of shareholders in car-rental company Hertz, who were handsomely rewarded when Hertz was rescued from bankruptcy by a group of investors.

Revlon's rebound has come alongside rallies in other so-called meme stocks popular with retail investors such as AMC Entertainment Holdings Inc and GameStop Corp, which were hit hard in the first half of the year.

Revlon filed for Chapter 11 bankruptcy in June after saying that its high debt load left it too cash-poor to make timely payments to vendors. The company received approval for a $1.4 billion bankruptcy loan on Aug. 1 despite objections from its official creditors committee, which called the company a "mess" in a court filing.

Despite the recent rally, Revlon's shares are down 30% for the year-to-date.

(Reporting by David Randall; Editing by Leslie Adler)

Citi Sues Revlon Over Lender Status After $900 Million Mistake

Jeremy Hill Mon, August 15, 2022 

(Bloomberg) -- Citigroup Inc. has sued Revlon Inc. in a bid to resolve a nagging legal question that emerged after the bank mistakenly wired $900 million to the cosmetics giant’s lenders and intensified after Revlon filed for bankruptcy.

When Citi accidentally sent $900 million to Revlon lenders in August 2020 and later failed to get most of it back, the bank said it became a lender to Revlon, effectively stepping into the shoes of funds who refused to return about $500 million of the mistaken payment. But Revlon has since hinted that it may challenge Citi’s status as a creditor, prompting Citi to file suit in bankruptcy court Friday.

Citi is asking Revlon’s bankruptcy judge to dispel any doubt about its right to repayment under the Revlon term loan. Because it had no obligation to pay down Revlon’s debt, denying the bank its rights as a creditor would let Revlon “escape liability for its own debt obligations,” lawyers for Citi wrote in the complaint.

The bank was not aware that anyone would challenge its status as a creditor until days before the cosmetics company filed for Chapter 11 protection in June, according to court papers. It was then that Revlon and some of its creditors refused to acknowledge the bank’s rights as a secured lender in the company’s bankruptcy financing package.

“Unsurprisingly, neither the Revlon Group nor any other party-in-interest had ever articulated any legitimate legal or factual basis for challenging Citibank’s subrogation rights for inclusion in the DIP Orders,” lawyers for Citi wrote. “There is none.”

Representatives for Revlon didn’t immediately respond to a request for comment Monday.

The bankruptcy case is Revlon Inc., 22-10760, U.S. Bankruptcy Court for the Southern District of New York (Manhattan).

BOOM GO CRASH

Crypto Lender Celsius On Pace to Run Out of Cash by October


Krisztian Sandor
Mon, August 15, 2022 


Celsius Network, the crypto lender that filed for bankruptcy in July, appears to be in even worse financial straits than previously signaled.

A new court filing Monday from Kirkland & Ellis, a law firm the crypto lender hired to lead its restructuring efforts, included financial projections that Celsius will run out of cash by October.

The filing, submitted to the U.S. Bankruptcy Court for the Southern District of New York in advance of an upcoming hearing, also stated that the crypto lender holds $2.8 billion less in crypto than it owes to depositors.

“My initial thought was, ‘Wow, that's a big hole.’ It’s pretty tough,” Thomas Braziel, founder of 507 Capital, an investment firm that provides financing around bankruptcies and reorganizations, told CoinDesk.

Celsius was caught up in this year's crypto crisis, which led to withdrawal suspensions and insolvencies of various lenders, exchanges and investment companies. Celsius halted all user withdrawals in June, citing “extreme market conditions.”

Last month, Celsius filed for Chapter 11 bankruptcy and acknowledged that it had a $1.2 billion hole in its balance sheet – liabilities exceeding assets – after it paid off its debt to decentralized finance protocols. That calculation included the estimated value of the firm’s mining equipment and unspecified “other” assets.

Read more: Celsius Lays Out Mining-Focused Reorganization Plan at First Bankruptcy Hearing

Running out of money

The latest disclosure showed that Celsius holds cash that is enough for less than three months, and it forecasted that the company will run out of money by the end of October.

In the monthly cash flow forecast, the firm disclosed a beginning cash balance of almost $130 million at the start of August.

Given the firm’s operating expenses and other costs including expenditure for restructuring efforts are expected to total $137 million for the next three months, the balance would turn negative in October. By then, the firm projects it would have liquidity of negative $33.9 million.

The crypto lender projects to run out of cash by October. (Kirkland & Ellis)

“They [Celsius] could obtain debtor-in-possession financing or sell assets,” Brandon M. Hammer, counsel at Cleary Gottlieb Steen & Hamilton, a law firm, told CoinDesk. “However, to take such steps they would need court approval, which requires notice and an opportunity for interested parties, like customers and the creditors committee, to object." (Neither Hammer nor the law firm are involved in the bankruptcy case.)
Bitcoin Hole

The document also showed that Celsius’ liabilities in crypto to customers surpasses $6.6 billion while the lender only holds $3.3 billion of digital coins – for a $2.8 billion difference as of July 29.

“The coin deficit seems somewhat greater than the losses described in the first day disclosures,” Hammer said. “It also appears that the company likely had to sell assets at depressed prices to meet customer withdrawals before the 'pause.' Such sales are common in bank run situations and may, depending on the particular facts, be subject to clawback risk.”

The most alarming is the hole in bitcoin holdings. Celsius disclosed it owes $2.5 billion in bitcoin (104,962 BTC) while the firm holds $348 million in bitcoin (14,578 BTC) and $557 million in a type of bitcoin derivative (23,348 WBTC).

“The bitcoin hole is huge, much bigger than I would have suspected,” Braziel said.

Celsius' digital coin liabilities to users exceed its assets by $2.8 billion. (Kirkland & Ellis)

The lender also holds $1 billion less in ether (ETH) than what it owes to users, although the 410,000 stETH, an ether derivative token, is still in the firm’s possession. The hole in USDC stablecoin holdings accrues to $700 million.
The issue with CEL token

According to the filing, Celsius has 658 million CEL tokens in its treasury; this is the platform’s utility token. Celsius owes 279 million of the tokens to clients, leaving the firm with a 379 million surplus . At current market prices, the CEL net position would be worth almost $1 billion, more than double than what’s in the document, as the token is in the middle of a social-media-driven short squeeze attempt.

Still, the price rise does not help the company solve its balance sheet problem. Most of the token’s supply is locked up on the platform and liquidity on exchanges is thin. If the firm would try to sell CEL to cover a part of the hole on its balance sheet, prices would likely tank.

“The asset side of the CEL holding is probably worth zero,” Braziel said, adding that the liabilities are still there because CEL token owners will probably try to come after Celsius and claim for $1 per token.

CRYPTO CAPITALI$M

Galaxy Digital terminates BitGo merger, setting up another crypto legal fight

David Hollerith

·Senior Reporter

Mon, August 15, 2022 

One of the crypto industry's biggest acquisitions appears headed for court.

On Monday, Galaxy Digital said it was terminating a $1.2 billion deal to acquire crypto custodian and prime broker BitGo originally announced in May 2021.

Galaxy said it won’t pay a termination fee, citing BitGo’s failure to deliver “audited financial statements for 2021 that comply with the requirements of our agreement.”

Just hours later, BitGo called the termination “improper,” saying it has hired a law firm to recoup a $100 million “reverse break fee [Galaxy Digital] had promised back in March 2022.”

The now-terminated deal represented the largest corporate acquisition in the crypto sector’s history.

Mike Novogratz, CEO of Galaxy Investment Partners, speaks during the Bitcoin 2022 Conference at Miami Beach Convention Center on April 8, 2022 in Miami, Florida. (Photo by Marco Bello/Getty Images)

“Either Galaxy owes BitGo a $100 million termination fee as promised or it has been acting in bad faith and faces damages of that much or more,” R. Brian Timmons, a Quinn Emanuel partner representing BitGo said in the company’s response, arguing the merger agreement was not scheduled to expire. BitGo ended 2021 with more than $64 billion in assets held in custody, according to its founder and CEO Mike Belshe.

Since the deal was announced in May 2021, the total value held in crypto assets has dropped by 53% according to Coinmarketcap.

In that same time, shares of Galaxy Digital (GLXY.TO), which are listed on the Toronto stock exchange and trade on over-the-counter markets, have fallen by 73% from $34 to $9 per share.

At the end of its first quarter, Galaxy announced that it would restructure the terms of its acquisition of BitGo due to the decline in the company’s share price.

Galaxy Digital was known as a heavy backer of the Terra blockchain, with CEO Mike Novogratz having inked a LUNA tattoo on his arm months before the $45 billion collapse of Terra’s LUNA and sister coin, algorithmic stablecoin UST in May.

"It is public knowledge that Galaxy reported a $550 million loss this past quarter, that its stock is performing poorly, and that both Galaxy and Mr. Novogratz have been distracted by the Luna fiasco," Timmons added.

Galaxy Digital reported a $554 million loss in its most recent quarterly earnings results, citing the decline in crypto asset prices as well as an unrealized loss charge it took for its crypto holdings. Additionally, the company held approximately $1 billion in cash.

Galaxy's “long-awaited acquisition of BitGo had been part of a broader plan that included to become a Delaware-based company and then to list its stock on a U.S. exchange,” according to Mark Palmer, head of digital asset research with BTIG.

Galaxy said Monday it remains on the path to gain status as a Delaware company with the aim of eventually listing on the Nasdaq.

Bitcoin Miner PrimeBlock Cancels Listing Plans, Terminates $1.25B Merger With 10X Capital
Jamie Crawley
Tue, August 16, 2022 


Bitcoin (BTC) mining company PrimeBlock has ended its plans to go public via a merger with blank check company 10X Capital Venture Acquisition (VCXA).

The two firms terminated their agreement by mutual consent on Aug. 12, according to a U.S. Securities and Exchange Commission filing.

Plans for the listing were confirmed in April with expectations that the merger would be completed in the second half of 2022 carrying an enterprise value of $1.25 billion.

No official reason has been given for the decision, but the uncertain conditions in both the crypto and mainstream markets in recent months may have been a factor.

Special-purpose acquisition company deals have been a prevalent means for crypto companies to access public stock markets in recent years, but their attraction has cooled following the downturn in digital asset markets.

In July, trading platform eToro's planned public listing via a $10.4 billion merger with FinTech Acquisition Corp. V was terminated with Fintech Chairman Betsy Cohen saying it had become "impracticable."

Bitcoin Miner Riot Takes $349M Goodwill 

Impairment Charge on Acquisitions

Aoyon Ashraf

Tue, August 16, 2022 

Riot Blockchain (RIOT), one of the largest publicly traded bitcoin miners, recorded $349.1 million in impairment charges to goodwill in the second quarter, tied to its acquisitions of miner Whinstone U.S. and electrical equipment provider ESS Metron in 2021, in its second-quarter earnings released on Monday after the close. It also reported an impairment charge of $99.8 million on its bitcoin holdings.

Large impairment changes have been a common occurrence for miners as the prices of cryptocurrencies have plummeted this year. Most recently, peer Marathon Digital (MARA) said it booked $127.6 million impairment changes in the second quarter due to the decline in the prices of digital currencies.

“Although challenging global market conditions in the second quarter, further impacted by a steep decline in the price of Bitcoin and resulting decline in market valuations for publicly-traded Bitcoin miners, including Riot, necessitated non-cash impairment charges this quarter, these non-cash charges had no impact on our solid financial position and ample liquidity, both of which were further strengthened this quarter,” said CEO Jason Les in a statement.

The miner was scheduled to report its earnings last week, when most of its peers released their results. However, Riot said on Aug. 9 that it delayed its quarterly earnings report because it needed more time to calculate how much the cryptocurrency rout, the war in Ukraine and other macroeconomic issues have reduced the value of its assets.

Riot maintained its hash rate growth guidance of about 12.5 exahash per second (EH/s) by the first quarter of next year, which it first forecasted on Aug. 3.

Riot also reported total first quarter revenue of $72.9 million, missing consensus estimate of $75.5 million, according to FactSet data. It currently has 44,720 bitcoin miners, with a hash rate capacity of 4.4 EH/s.

Riot shares fell about 6% on Tuesday. Its stock has fallen about 60% this year, in-line with its mining peers, while bitcoin’s price has been cut nearly in half.

BHP reveals record dividends as soaring coal prices and M&A activity power miner's profits to $31bn

Harry Wise For This Is Money - 

BHP Group has declared bumper annual earnings and shareholder returns thanks to soaring coal and copper prices.

The mining giant reported profit growth of 173 per cent in the 12 months ending June to $30.9billion, bolstered by a $7.1billion gain from the merger of its petroleum business with Woodside Energy and the sale of its Mitsui Coal operation.

BHP paid out a special $19.6billion dividend following the Woodside deal and on Tuesday announced a final dividend worth $8.9billion, meaning the firm will return a record $36billion of cash to investors for the year.


© Provided by This Is Money

Shareholder Boom: BHP announced a final dividend worth $8.9billion today, meaning the Australian firm will return a record $36billion of cash to investors

The firm also saw record underlying profits and free cash flow on the back of huge sales from its Western Australian iron ore business and surging commodity prices.

Copper prices traded at historic highs for much of the financial year, while both energy and metallurgical coal prices rose to their highest ever levels in the second half of the period.

Commodity prices have been boosted by sanctions against the Russian mining industry following the full-scale invasion of Ukraine.

Energy coal prices jumped as people began switching to coal as liquefied natural gas costs skyrocketed, trade flows were redirected from Asia to Europe, and hot weather affected prominent importing regions.

Related video: BP Raises Dividend, Buybacks as Higher Prices Boost Profits
View on Watch

This helped the group's coal segment triple its revenues to $15.5billion and swing back to an underlying profit of $8.7billion, having recorded a $577million loss the previous year.

Cost control measures also enabled the Australian company to slash its net debt by 92 per cent to just $333million.


© Provided by This Is MoneyRecovery: BHP's coal segment saw revenues triple to $15.5billion, while it swung back to an underlying profit of $8.7billion, having recorded a $577million loss the previous year

Chief executive Mike Henry said: 'These strong results were due to safe and reliable operations, project delivery and capital discipline, which allowed us to capture the value of strong commodity prices.'



BHP Group shares closed trading 5.5 per cent higher at £23.60 on Tuesday, meaning their value has grown by around a fifth since the start of 2022.

The company warned that its near-term outlook would be negatively impacted by slowing growth across major markets, political uncertainty and central banks pursuing tighter monetary policies.

However, it expects to benefit from a rebound in the Chinese economy, which has been heavily affected by severe lockdown restrictions and a downturn in its commercial property industry.

Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, said: 'Despite China's fragility, commodity giant BHP Billiton sees it as the more reliable source of revenue ahead, while other advanced economies face more of a struggle amid rising inflationary pressures.




'Weaker commodity prices, especially for industrial metals, remain a risk for the miner ahead especially given worries about China's property sector, although its strong cost control and low-cost operations should give it resilience amid the uncertainty.'

To try and take advantage of the fall in commodity prices, BHP recently launched a takeover bid for Adelaide-based Oz Minerals worth $5.8billion, a 32 per cent premium on the firm's closing share price on 5 Friday.

The board of Oz rejected the offer on the grounds that it substantially undervalued the business, while chief executive and managing director Andrew Cole called it 'highly opportunistic.'