A publicly traded Hicksville company that had optimistic plans of becoming a profitable bitcoin mining firm has rescinded on their plans, as the cryptocurrency market is facing large obstacles forging ahead with its quest to be a world-wide alternative to traditional money.
Long Island Iced Tea Corp, whose business is selling non-alcoholic beverages, announced a giant change in December of last year and saw its shares skyrocket after they announced their focus on bitcoin. Shares rose as much as 289% after the announcement and subsequent rebranding as Long Blockchain Corp, Bloomberg reported.
It was the latest in a near-daily phenomenon in late December that was sweeping the stock market, where little known microcap companies reoriented to focus on some aspect of the mania sparked by bitcoin’s 1500% rally. Towards the end of last year bitcoin’s price had risen tremendously from $1000 a coin to peaking at $20,000 a coin in late December.
Long Blockchain Corp. quickly reshaped its path last week, only a little over a month of stepping into the bitcoin realm. However, they are still counting on the cryptocurrency craze as their ingredient for growth.
The company announced Friday that it will not be acquiring Bitcoin mining equipment that it was previously set to purchase; instead of buying more than 1,000 mining rigs, it says it will focus on completing a merger with Stater Blockchain Ltd. a British firm that develops technology to power digital-currency transactions, Bloomberg reported.
“We will continue to evaluate the purchase of mining equipment for Bitcoin and other digital currencies as part of our larger blockchain initiative,” Shamyl Malik, head of the LBCC’s Blockchain Strategy Committee, said in a press release. The company also stated that the mining equipment was just a small part of their overall plan.
Recently several important developments have occurred around the globe and in the banking industry which apparently has spooked investors from the cryptocurrency world.
Since the start of the year, China has started heavily regulating trading, mining farms and payment channels. The crackdown launched by Chinese financial regulators on bitcoin – shutting down mainland bitcoin exchanges, ordering local governments to clean up mining farms and freezing payment channels for cryptocurrency transactions – has hurt bitcoin demand in China. Cryptocurrency prices started a significant dip in January. The prices of all cryptocurrencies, including bitcoin, have continued to tumble.
The crypto markets took an even bigger hit late last week when most major U.S. credit card issuers have now banned the use of their cards to buy Bitcoin or other digital currencies on credit.
Bank of America began blocking cryptocurrency purchases last Friday, JPMorgan did the same the following day; Citibank is also going to halt purchases of cryptocurrencies, while Discover and Capital One have also stopped all purchases on credit on all digital currency. These banks also happen to be the top 5 credit issuers in the U.S.
These obstacles continue to raise red-flags of investors from sticking with this innovation. However, millions of investors and companies like Long Blockchain Corp. are still cautiously optimistic about the future of digital currency.
By Jared Evan