Cryptocurrency mergers and acquisitions

• M&A mergers and acquisitions

2021: The volume of M&A transactions in the cryptocurrency sector grew by 4846%, to $55 billion

At the end of 2021, the volume of mergers and acquisitions (M&A) in the cryptocurrency sector reached $55 billion against $1.1 billion a year earlier (an increase of 4868%). According to the published report PricewaterhouseCoopers (PwC ), the average transaction size has more than tripled.

The United States leads in the absolute number of transactions, 51% of all transactions in 2021, compared with 41% in 2020. Europe, the Middle East and Africa (EMEA) accounted for 33% of all transactions, and the Asia-Pacific region (APAC) accounted for only 16%. If we consider the value of transactions in total equivalent, then the EMEA region is leading with $25.5 billion, in the USA - $24.5 billion, and in APAC (Asia-Pacific region) - $5 billion. The increase in the average deal size to $179.7 million from $52.7 million was caused by a boom in the United States in 2021, when several mergers worth more than $1 billion were concluded.

The volume of M&A transactions in the cryptocurrency sector grew by the end of 2021 by 4846%, to $55 billion

The PwC also monitored transactions to raise funds in cryptocurrencies, finding an increase of 645% in 2021 to a total value of $34.3 billion. The average deal size increased by 143% to $26.3 million. The diversified number of transactions in various business sectors indicates the continued development of the cryptographic ecosystem, noted in the PwC, and signals the wider spread of cryptographic services.

By making a forecast report for 2022, the authors of the report from PwC expect the dynamics to continue, noting the significant growth in venture funds, which must be put into action. Given the slowdown in SPAC activity, these are special sponsoring companies that enter the exchange for the subsequent merger with a promising private company. It is venture capital firms and incubators that will become the largest source of mergers and acquisitions in cryptocurrency. Regarding the specific cryptocurrency sector that should be monitored, Marathon Digital CEO Fred Thiel expects continued consolidation in the mining sector, as miners with insufficient funds seek to merge with stronger players.^[1]

2020: Growth in the volume of mergers and acquisitions in the crypto industry by 2 times, up to $1.1 billion

The total volume of mergers and acquisitions increased more than 2 times in 2020, reaching $1.1 billion. In 2019, the figure was $481 million. This is stated in the report of the consulting company PricewaterhouseCoopers (PwC).

In 2020, the average transaction size rose to $53 million from $19 million a year earlier. The total amount of funds raised showed an increase of 33%. In the countries of the region EMEA there was a noticeable surge in the number of transactions, and in the Americas - a threefold increase in the value of the transaction.

At EMEA (Europe, Middle East and Africa), the volume of deals concluded increased from $131 million to $303 million. In the Americas in 2020, this figure increased more than 3 times - from $251 million to $785 million, the share of the region increased from 52% to 71%. Every third transaction took place in Europe, in 2019 every fourth transaction took place in this region.

Cryptocurrency mergers and acquisitions doubled in 2020

After new highs in 2020, transaction activity in the crypto industry is likely to continue to grow in 2021. The head of the PwC, Henri Arslanyan, predicts that in 2021 new records will be set for all indicators. The main drivers of growth, according to his assumptions, will be institutional players, large investors, as well as cryptocurrency platforms with significant reserves in traditional currency.

PwC predicts that along with the strengthening of cryptocurrency consolidation, the industry will become more institutionalized. The report also notes new historical highs in the price of Bitcoin, the capitalization of steablecoins, the spread of national digital currencies, the development of segments of decentralized finance (DeFi) and non-replaceable tokens (NFT).

In 2020, major global cryptocurrency exchanges, such as Binance, FTX and Coinbase, were among the three largest acquisitions in the crypto industry.^[2]

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