Block.one, the try hard of the crypto industry
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Illustration: Tiffany Herring/Axios
The lede has largely been buried on the biggest news from the crypto media world in recent days.
Between the lines: CoinDesk's acquisition by Bullish means that Block.one — a bit of a pariah in the crypto world, but one with a giant war chest — just bought the industry's most important media outlet.
Catch up fast: Block.one, which launched Bullish in 2021 as a subsidiary, owes much of its wealth to the proceeds of a massive initial coin offering it ran from 2017 to 2018.
- The ICO was ostensibly to pay for launching the EOS blockchain, and reportedly raised $4 billion.
Zoom out: While the effort to build a blockchain didn't go well, what it did with the excess funds worked out exceptionally. Mainly, it bought bitcoin — a lot of it.
- Since that time, founder Brendan Blumer has used Block.one as an active investor in the crypto space, including buying in to crucial aspects of the industry.
Details: In 2020, it managed to lead the Series B for CoinDCX, the largest crypto exchange in India.
- In 2021 it acquired a stake in Northern Data by selling a mining operation to the bitcoin miner.
- Its portfolio page notes it has a stake in CipherTrace, a blockchain surveillance firm acquired by Mastercard in 2021.
- And late last year Block.one and Blumer combined to hold the largest single stake in Silvergate Bank, one of the banks (alongside Signature) that had made it possible for crypto exchanges to send each other dollars 24/7. It exited that position at a loss.
Of note: This isn't Block.one's first attempt to buy a media company, either. It expressed an interest in Forbes back in 2021, Axios' Sara Fischer reported.
Zoom in: CoinDesk has perhaps the best combination of tenure and reputation of any trade publication fighting for eyeballs among the small but enthusiastic crowd of investors in the asset class.
- Disclosure: I worked there from 2017 to 2021, writing about various topics including a number of stories about the failings of Block.one's EOS.
- Those warnings held up well: EOS was the seventh-largest blockchain in the world. It has since fallen to 65th, losing well over two-thirds of its market cap, falling from $3 billion when I was covering it to about $800 million today.
- EOS users have since taken over (but it hasn't helped).
Be smart: That's not to say that Block.one itself hasn't been successful. In fact, just the opposite.
- Bloomberg got hold of an investor letter in 2019 that said the company held 140,000 BTC, an investment fueled by the proceeds of the 2017/2018 EOS blockchain ICO.
- In 2019, that would have been worth about a billion dollars. Today, it's more like $5 billion (and twice that in late 2021).
Quick take: Block.one may have unwound some portion of that position or used some of it to make investments. If so, it likely timed it well, since Blumer disclosed it had only increased holdings through 2020 (just ahead of the 2021 boom).
- BitcoinTreasuries.net, which compiles data from public filings, announcements and social media posts, reports it holds 164,000 BTC now.
Block.one and Bullish did not respond to request for comment from Axios.
In the weeds: While the blockchain launched on Block.one has been a failure, the company hasn't given up on the technology stack. In continues to build on the EOSIO platform that runs EOS.
- Bullish runs on EOSIO according Block.one, as does Mythical Games, which it backed in 2018.
- EOSIO also ran a social media platform called Voice, which later pivoted to selling NFTs. Then in September Voice announced it was shutting down.
The bottom line: When a company's reputation doesn't open doors, big checks still can.
