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Small Public Firms Turn to Ether in New Crypto Rush Despite Risks

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A growing number of smaller publicly traded companies are adding ether to their balance sheets, positioning it as both an inflation hedge and a growth asset. Corporate treasuries collectively held around 966,304 ether — worth nearly $3.5 billion — by the end of July, compared with just under 116,000 tokens at the close of 2024, according to a Reuters analysis.

Ether’s appeal lies in its dual role: it serves as a high-potential investment and as a functional asset powering the Ethereum blockchain. Unlike bitcoin, whose value depends solely on price appreciation, ether can also be staked to earn yields of about 3–4% while supporting the network. Proponents, such as Bit Digital CEO Sam Tabar, view ether as “institutional-grade” yet early enough in adoption to offer substantial upside. Others liken its role in decentralized finance to oil in the energy sector — essential infrastructure rather than just a store of value.

Investor enthusiasm has fueled sharp share price surges for companies announcing ether purchases. Peter Thiel-backed BitMine and GameSquare saw stock gains of 3,679% and 123%, respectively, after disclosing accumulation plans. However, analysts caution against overexcitement, warning that such rallies resemble the “meme stock” phenomenon.

Challenges persist, including crypto’s inherent volatility, regulatory uncertainty — especially regarding staking activities — and accounting complexities for locked tokens. Many corporate finance leaders remain wary, prioritizing liquidity and predictability over speculative gains. Staking rewards could also fall into compliance gray areas, raising questions over taxation and custodial obligations.

Despite these hurdles, some firms remain aggressive. BitMine sold a $182 million stake to ARK Invest in July, while GameSquare has hinted at further stock sales to finance ether buys. As CEO Justin Kenna put it, the approach is “opportunistic” rather than overly dilutive.

Elon Musk’s xAI Set to Raise $5 Billion Debt Despite Tepid Investor Interest

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Elon Musk’s AI startup, xAI, is poised to close a $5 billion debt financing led by Morgan Stanley, although investor demand has been notably modest, according to sources familiar with the matter. The debt package includes a floating-rate term loan, a fixed-rate loan, and secured bonds, with allocations scheduled for Wednesday.

The floating-rate loan carries an interest rate of 700 basis points above the Secured Overnight Financing Rate, while the fixed-rate loan and secured notes offer yields near 12%, significantly higher than the current 7.6% average yield for high-yield bonds. This elevated cost reflects the risks investors associate with xAI’s unrated debt and lack of profitability to date.

Several potential investors declined to participate, citing concerns over xAI’s financial transparency and Musk’s previous financing history. Notably, Musk’s 2022 $44 billion acquisition of Twitter involved $13 billion in loans that lenders had to retain on their balance sheets for two years due to poor secondary market demand.

While the debt issuance was fully subscribed, total orders amounted to roughly 1.5 times the amount offered, below the typical 2.5 to 3 times seen in similar junk bond offerings. Unlike Musk’s Twitter debt deal—where banks guaranteed the sale and committed capital—this transaction is structured as a “best efforts” deal with no such guarantees from Morgan Stanley.

Beyond debt, xAI is also reportedly pursuing a $20 billion equity raise that could value the company above $120 billion, with some investors estimating up to $200 billion.