Cryptocurrency windfall

Photo: Contributed

The investor frenzy driving bitcoin prices to precipitous heights is playing out on stock markets as well, as companies shift focus to cryptocurrencies to get in on the latest boom.

"People are trying to surf off the wave of bitcoin by strategically changing their name," said Jean-Philippe Vergne, co-director of the Scotiabank Digital Banking Lab at Western University. "There's always been a strategic use of these market hype cycles."

Hive Blockchain Technologies Ltd. (TSXV:HIVE) has been making the most of the heightened interest, announcing plans Wednesday to raise as much as $100 million to buy more digital currency mining hardware.

The financing comes after the company had already raised more than $80 million since announcing in June it was changing its name from Leeta Gold Corp. and its focus to cryptocurrencies, prompting its share price to climb from about 29 cents before its restructuring to about $3.69 midday Wednesday.

Smaller players have also jumped into the fray recently. Global Blockchain Technologies Corp. (TSXV:BLOC) was until October a thinly-traded company called Carrus Capital Corp., but with its name change and shift in focus to investing in a range of cryptocurrency opportunities its stock price has doubled and it's trading activity is up considerably.

Block One Capital Inc. (TSXV:BLOK) was known as Essex Angel Capital Inc. until it announced in early November that it was changing its name and directing new investment capital into the blockchain sector.

The company's share price went from about 25 cents before the announcement to a high of $1.77 in early December after it said it was buying part of a firm that had ordered cryptocurrency mining hardware. Block One has also announced a $5 million financing that it raised to $8 million on Tuesday.

While cryptocurrency startups may well provide legitimate investment opportunities, and the technology behind them provide immense potential, Vergne said part of what's helped prop up stocks has been the limited ways to invest in the boom.

Since Sunday, though, mainstream investors have been able to buy bitcoin futures on Cboe Global Markets, while CME Group Inc. said it plans to launch bitcoin futures trading on Dec. 17.

With the increase in investment opportunities, concerns about an investment bubble and the potential fallout when it pops have grown.