Itty-bitty Bitcoin M&A

Contact: Ben Kolada, Scott Denne

Although the values of cryptocurrencies have skyrocketed, at least in the eyes of the beholders, the values of vendors in this sector so far haven’t followed suit. To date, we’ve recorded just a few acquisitions of cryptocurrency companies and assets, with nearly all having been done by tiny acquirers. The dealmaking so far suggests that the new-world currency medium has an odyssey in front of it before it becomes an established, liquid currency, and before its exchanges become worthy of big-ticket acquisitions.

Ripple Labs, with backing from Andreessen Horowitz, Lightspeed Venture Partners and others, ‘acq-hired’ simplehoney as it builds out a payment protocol to transact in Bitcoin and other currencies. CoinMyne, a maker of Bitcoin-mining software, added to its software products by purchasing the CGWatcher and CGRemote products and hiring their creator, Justin Milone. And yesterday, EffTec International, a penny stock, grabbed BitBank. (We’ve also noticed that Bitcoin is finding its way into M&A in other ways – Lemon, a mobile wallet startup acquired by LifeLock for $43m, had $1.2m worth of Bitcoin on its balance sheet.)

Acquisitions are likely to remain small for quite some time, given recent events. The ongoing implosion of Bitcoin exchange MtGox means that the road to high-profile liquidity for cryptocurrency vendors is going to take longer than initial hype suggested, if it materializes at all. However, if banks and retailers become comfortable with Bitcoin as either a currency or a secure medium for transacting, deals could swing upward, as we’ve seen with the rising volume of mobile payment acquisitions.

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