January Paper – SFJ

staples WHAT WILL 2024 BRING? S T U D E N T FI N A N C I A L J O U R N A L

Looking ahead towards next year’s tailwinds

Possibilities for 2024 Page 5 See Also The progress of Disney’s turnaround Page 6 Bitcoin’s bold pivot to main-street investors Page 9

DECEMBER 2023 PHOTO CREDIT GETTY IMAGES

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Table of Contents

December headlines The Federal Reserve announced it expected to implement 3 rate cuts in 2024. A surprising pivot, the announcement rallied markets on the new–a happy ending after an incredible year for investors.

Treasury yields taunted traders, ending at 3.88% Friday–exactly where they began the year. In a sense, it’s a sign of relief for bond investors who in October were looking at yields as high as 5.00% (bond yields and values are opposite)

Stories this month

Staff Credits 2023

04 How big of a threat is the national debt? Each year, the United States economy approaches a critical tipping point–whether to raise the debt ceiling once more to avoid financial calamity.

Journal Creator Henry Watson

05 Possibilities for 2024. Much of what occurred last year would’ve been unimaginable in a prediction article. A soft landing for the American economy. Sino-American relations cooling after years of economic and defense disputes.

06 Disney’s turnaround. The Walt Disney Company has certainly had better years. It has been confronted with a rapidly declining linear business and several blunders at the box office. Moreover, the mood at the company itself has declined rapidly since Bob Iger returned as CEO one year ago.

Taking a breath After a strong surge in the beginning of December, especially after the Federal Reserve’s dovish pivot, markets took a pause in the late half of the month.

Wall Street largely expects the market to consolidate before continuing to rally.

08 The aftermath of the banking crisis. Banking at its heart is a boom and bust cycle.

Little over a year ago, economists believed that the global economy was in the former rather than the latter.

Oil prices After a middle-of-themonth surge due to supply chain disruptions in the Red Sea, oil prices continued to pullback as production cuts by the Organization of Petroleum Countries failed to rally prices higher.

09 Crypto’s golden year. One could find no shortage of articles one year ago that proclaimed the end of crypto currency was in sight. Since then, crypto’s believers have proved the industry is here for good.

Notice The Staples Financial Journal is not a club. It is an indepedent subsidiary of the Staples Investment and Trading Society (ITS).

ITS Finance Club, Student Advisors Alexander Sod Andrew Rebello Editors Thomas Nowak Matthew Darien Matthew Guadarrama Staff Writers Aidan Zer Jake Wadley Steven Castillo Mieszko Solowinski Harrison Gumbrecht Pranav Pothukuchi Lucas Baer Brian Lu Nick Penna Haroon Baig Additional Information Online Access By the end of January, all articles seen in the magazine will also be published–for free–on our website, staplesfj.com.

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U.S. Markets Largest Components & Indices, MTD Nasdaq 100

Standard & Poor ’s 500

Dow Jones Industrial Average

Stock data* AAPL MSFT AMZN AVGO META TSLA NVDA GOOG COST ADBE PEP AMD INTC NFLX CSCO TMUS CMCS INTU QCOM TXN AMGN HON AMAT BKNG ISRG SBUX VRTX LRCX GILD

2.58 192.5 1.36 -0.76 -2.87 376.0 151.9 4.91 3.34 20.03 186.25 1,116.2 8.97 29.14 353.9 9.65 248.4 4.04 5.90 27.57 495.2 7.61 140.9 5.71 10.71 63.83 660.0 -2.59 -15.87 596.6 169.8 1.15 0.68 21.44 26.02 147.4 50.2 14.88 6.51 21.14 486.8 4.54 50.5 2.05 4.23 8.08 160.3 5.31 -0.61 -0.27 43.8 8.83 50.71 625.0 11.54 14.96 144.6 9.83 15.25 170.5 15.57 288.0 5.71 11.93 209.71 6.03 6.91 10.48 162.0 12.27 387.6 3,557 7.03 22.16 337.4 -3.22 -3.19 96.0 15.87 55.73 406.8 8.47 61.18 783.2 3.36 81.01 4.33

% change $ change $ last

% change $ change $ last

% change $ change $ last

AAPL MSFT AMZN NVDA GOOG META GOOG TSLA BRK.B AVGO JPM UNH LLY V XOM JNJ MA HD PG COST MRK ABBV ADBE CVX CRM AMD PEP KO WMT

2.58 192.5 1.36 -0.76 -2.87 376.0 151.9 4.91 3.34 5.90 27.57 495.2 7.61 140.9 5.71 8.97 29.14 353.9 7.61 140.9 5.71 9.65 248.4 4.04 -0.11 -0.41 356.6 20.03 186.25 1,116.2 8.45 13.26 170.1 -3.79 -20.69 526.4 -1.12 582.9 -0.19 3.90 260.4 1.52 -2.92 -3.01 99.9 -1.04 -1.64 156.7 12.15 426.5 2.93 8.43 26.93 346.5 -4.01 -6.12 146.5 10.71 63.83 660.0 5.56 109.0 5.37 8.06 11.56 154.9 -2.59 -15.87 596.6 4.35 149.1 3.00 263.1 3.14 1.21 21.44 26.02 147.4 169.8 1.15 0.68 58.9 0.29 0.49 -0.00 -0.00 157.6

UNH GS MSFT HD CAT MCD AMGN CRM V BA HON AAPL TRV AXP JPM IBM WMT JNJ CVX PG MMM NKE MRK DIS KO CSCO INTC VZ WBA

-3.79 -20.69 526.4 10.72 37.34 385.7 -0.76 -2.87 376.0 8.43 26.93 346.5 15.15 38.91 295.6 3.69 10.55 296.5 15.57 288.0 5.71 263.1 3.14 1.21 3.90 260.4 1.52 11.46 26.79 260.6 11.93 209.7 6.03 2.58 192.5 1.36 8.51 190.4 4.68 13.58 187.3 7.82 8.45 13.26 170.1 3.00 163.5 1.87 -0.00 -0.00 157.6 -1.04 -1.64 156.7 4.35 149.1 3.00 -4.01 -6.12 146.5 9.47 109.3 9.48 -4.33 -4.91 108.5 5.56 109.0 5.37 -2.47 -2.29 90.3 58.9 0.29 0.49 50.5 2.05 4.32 50.2 14.88 6.51 -2.28 -0.88 37.7 26.1 25.59 5.32

* In each index, only the 30 largest firms by weight are shown.

ECONOMY

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U.S. Economy

How big a threat is the national debt?

The $33 trillion question

E

ach year, the United States economy approaches a critical tipping point–whether to raise the debt ceiling once more to avoid financial calamity. Since the last balanced budget in 2001–where tax revenues and government expenditures roughly matched, America’s government has continuously allowed itself to spend more than it earns–racking up a bill now worth $33 trillion.

Not only is the size of the national debt worrisome, but also its ascent–having almost doubled in size since the beginning of the pandemic, according to The Economist. Furthermore, the Congressional Budget Office (CBO) forecasts that this number is only set to grow for the foreseeable future, reaching $46.4 trillion by 2033.

The most obvious impact of the debt is that the cost of servicing it is bound to rise alongside its size. By law, the United States Treasury has to pay regular interest payments and the ballooning size of these payments may force lawmakers in the near future to divert an even larger portion of the federal budget away from critical programs– like healthcare, education, infrastructure and defense–unless they wish to risk an economic default.

Indeed, this phenomenon is already taking shape. America’s 2023 budget allocated 13.6 percent of its total expenditures towards interest payments–a figure that is almost double the 7.08 percent ratio from the federal budget twenty years ago. By 2028, the CBO estimates that the United States will be spending more on its interest costs than on defense.

America’s national debt reverberates far beyond its national

creative commons Up, up and away

borders–the U.S. dollar continues to be the most held reserve currency by national banks and thus serves as a projection of economic might. Furthermore, day-to-day lending in financial markets often use American Treasury bonds as collateral. All of these bedrock functions would be thrown into disarray should a default occur.

There are three main workarounds that have been proposed to sidestep these issues. One of the most well known is the idea of a minted coin–the Treasury could, theoretically, mint a $1 trillion platinum coin that could then be sent to the Federal Reserve, who could then add that amount to the Treasury’s account, thereby raising the debt ceiling.

Another proposition is the introduction of high-yield bonds that–through clever accounting–could allow the Treasury department to raise $2 billion of funding while only adding $1 billion to the national debt.

The third solution is through the Constitution. The 14th Amendment declares that the validity of America’s debt “shall not be questioned,” and could be used as an argument that the Trea-

sury can continue issuing bonds in defiance of the debt ceiling.

However, all of these ideas have obviously been passed over by lawmakers. Namely under Mr Obama and now Mr Biden. These solutions would all be incredibly risky–namely the usherment, through these measures, of wobbly financial underpinnings, (even) looser fiscal discipline and devastating levels of inflation.

In the end, the implementation of any of these solutions– due to the ability of tax revenues to cover only 80 percent of government spending, would theoretically rip out 5 percent of America’s gross domestic product overnight. Furthermore, to write the obvious–if any of these solutions seemed viable–they’d already have been implemented.

The only true path out of America’s current fiscal trajectory is through tough political negotiation. Indeed, a vast majority of lawmakers in Washington admit the severity of the national debt–but are nevertheless unenthusiastic about producing any productive compromise–as any version of which would likely be politically damaging to both sides.

Any real solutions to balancing the budget are obviously unpopular. In addition to implementing the obvious–a balance of raising taxes and slashing spending on expensive programs like Social Security and Medicare, lawmakers could look at raising the retirement age from the 60s to the 70s and a national sales tax.

Ultimately, it is up to lawmakers to decide what is best.

However, any deal must involve bipartisan committees to tackle debt-reduction and engage nonpartisan makers for evidence-based policy making. In addition, a vast majority of Congress and the President would need to stand behind any deal for it to have legitimacy–less it be overturned come the next election cycle.

ECONOMY

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Getty Images

Global Economy

Possibilities for 2024 Last year, many pessimistic experts’ predictions were proven resoundingly wrong

M

uch of what occurred last year would’ve been unimaginable in a prediction article. A soft landing for the American economy. Sino-American relations cooling after years of economic and defense disputes. And most importantly, Taylor and Travis.

Looking ahead towards the next year, a few large events are likely to take place. However, almost nothing mentioned is guaranteed.

Across the world, the introduction of rate cuts is projected to increase the world’s global economic growth to 2.7 percent, according to the World Bank. It is a figure considerably better than the previous 1.7 percent growth rate in 2023.

The most important central bank, the Federal Reserve, under Chair Jerome Powell, is part of the band of banks that is widely expected to announce rate cuts by approximately June 2024 to stimulate economic growth and help the availability of credit. In December’s latest press conference, Mr Powell announced to markets that he would implement 3 rate cuts–each a decrease of 0.25 basis points–from the 5.25-5.50 rate that U.S. interest rates stand at now.

U.S. markets have already priced in the effect of

of rate cuts in the economy, according to Goldman Sachs. However, there is still debate over when and how quickly the Federal Reserve will cut rates. William Ackman, a hedge fund manager, warned on Bloomberg in December that the central bank would have to cut rates “pretty soon,” less they risk a recession.

There is also the U.S. presidential election. The Federal Reserve will likely cut at a comfortable period before Nov. 3, as any rate cuts too close to the election would help the incumbent, Mr Biden.

It is widely expected that the 2024 U.S. presidential election will be one of the closest and most hard-fought in recent memory. Financial Times writer Edward Luce predicted that the presidential election would also be the “nastiest” in U.S. history but that Mr Biden would “squeak through” as a narrow majority would vote more on “rejecting Trump” than Mr Biden’s success.

In 2023, many investors’ focused their attention not only on the United States but also on China and the stability of its economy, primarily over fears of ramifications should it start to unravel.

In particular, the property market–which accounts for a third of China’s gross domestic product–continued i 2023 to struggle as large property developers like the Evergrande Group were forced to file for bankruptcy over the industry-wide problem of heavy debt. This situation, along with government crackdowns on tech companies, have almost certainly ended the possibility of ultra-high single digit growth rates that China was known for in–2024 and beyond.

Artificial intelligence (AI)–which propelled much of American markets surge in 2023–is all but guaranteed to continue making developments at breakneck speed. Nvidia, the dominant supplier of AI hardware, will likely continue its share prices’ rally, as demand for AI will continue to accelerate. Technologically, models are sure to become more expansive in their capabilities and the first large-scale replacement of human tasks to artificial intelligence may occur.

Hopefully, it will include who has to write this article.

In climate change, a widely agreed key climate limit may be surpassed this year–the world reaching 2.7 degrees above preindustrial levels. Experts, such as U.S. climate envoy John Kerry, have publicly asserted that the figure is a “critical guidepost,” as remaining above the line for a sustained period of time has the potential to put 2 billion people in extreme danger and threaten considerable rises in sea-levels.

Hopefully, the most pessimistic possibilities in this article could be proven resoundingly false–as they were in 2023. Economic growth throughout the world could once again shock investors, artificial intelligence can prove that it’s a tool for good rather than chaos, and the progress at the climate change summit in Dubai could show its impact and deny the 2.7 degree threshold. Only time will tell.

Business

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Getty Images

One year into Disney’s turnaround Walt Disney CEO Bob Iger returned to Disney in late 2022, with a promise to cut costs and restore its standing

T

he Walt Disney Company has certainly had better years. It has been confronted with a rapidly declining linear business and several blunders at the box office. Moreover, the mood at the company itself has declined rapidly since Bob Iger returned as CEO one year ago.

Even Mr Iger’s long standing optimistic tone towards the company’s ambitions has faded. While Mr Iger is still widely viewed as a corporate star who led the company for 15 years before returning last November, his comments in July to investors about the company’s businesses did little to inspire confi-

dence: “Everything is on the table.”

Disney’s woes this year were by no means restricted to problems with its bottom line–it also faces an escalating, dual battle against Trian Fund Management and ValueAct Capital, two funds who are critical of Disney’s business decisions in the last five years, especially its costly $71 billion acquisition of Fox’s entertainment business.

Both seek to shake up management by nominating new members to Disney’s board of directors.

The company has largely rebuffed the demands of these firms, instead opting to focus on repairing the company’s issues in-house.

Since Mr Iger’s return, he has fo-

cused on restoring box office success after a series of flops, narrowing streamlining losses from the Disney+ network, lowering the company’s considerable debt burden and getting the company out of the political spotlight.

One Mr Iger’s first decisions was to decentralize content decision-making, a break away from the creative consolidation that his predecessor, Bob Chapek, had implemented. Previously, this decentralized structure had allowed for box-office successes like ‘Frozen,’ and ‘The Lion King,’ thought it will remain to be seen whether the company can rekindle its past successes, especially since many of the company’s highest grossing films were live-action remakes of already successful stories.

Streaming costs, by far the company’s biggest cash incinerator, are still the largest problem that the company faces. It is likely no coincidence that Mr Chapek soon found himself out of a gig after the company reported a $1.5

business billion streaming loss in Nov. 2022 and that Mr Iger’s first call to investors centered primarily around his plans on narrow streaming losses. Since then, Mr Iger has remained largely good to his word–the company has shrunk its losses in only one year by 75 percent, to a relatively far lower $387 million hole.

Nevertheless, the company is still pressed to find ways to cover the still-absolutely large losses and to pay off the huge debt-load the company has taken on through the last two decades of acquisitions. In addition to implementing a substantial price increase for Disney+ users, Mr Iger announced publicly in July 2023 that due in part to challenges being “greater than [he] had anticipated,” some of the company’s TV assets–such as ABC News–“may not be core” to the company and could be sold.

Disney also continues to struggle with its public perception–especially by conservative commentators and politicians.

Ever since the company criticized Florida Governor Ron DeSantis’ bill to prohibit the discussion of sexual orientation in young pupils’ classrooms in Nov. 2022, Mr DeSantis has sought to revoke Disney’s special-tax district which allowed the company to self-govern its property since the 1960s. In response, Disney’s legal team filed a lawsuit that alleges Mr DeSantis sought to punish the company’s freedom of speech.

All of these events–in only a year–have created a perfect storm of problems for the company that are unlikely to resolve themselves anytime soon. Indeed, Disney’s board of directors came to the same conclusion in July–announcing that Mr Iger would continue his position until Dec. 31, 2026–when he would be 75. Notably, this is the fifth time that Mr Iger’s tenure as CEO has been extended.

The board also took this decision due to the lack of any appar-

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walt disney company Just wanted to be King

ent successor to cap Mr Iger’s decades-long helm at the company.

There are few successors in the company itself that seem poised for the job–each of Disney’s top division heads have had little experience interacting with the others.

Mr. Iger’s best bet for succession seems to be bringing back Kevin Mayer and Tom Staggs–two former executives who left the company once they were passed over for the top job in the 2010s. Already, the two are serving as consultants on reshaping the media giant. The most likely bet from Mr Iger will be the announcement of two distinct figures, one of whom would ultimately be chosen as his successor.

In the near future, Disney’s improvements are likely to be marginal at best. In fairness to Mr Chapek, Mr Iger never truly left the company. Even after his official retirement, Mr Iger kept his expansive office at the company’s headquarters and put himself in charge of the company’s “creative endeavors,” mainly the movie and TV content operations.

Furthermore, while Mr Iger ultimately relinquished his remaining titles–he soon told confidantes he regretted it and wished to be re-

instated–only for the board to refute him. Mr Chapek also saw his leadership undermined by Mr Iger publicly in the press. Only three months after Mr Iger’s resignation, he reportedly angered the new boss by telling the New York Times that the Coronavirus pandemic would “necessarily result” in him actively “helping” Bob Chapek.

Nevertheless, in the long term, the company could still relive the success it once enjoyed in the mid 2010s. The company’s movies business has always been a valley-andpeak business–something that Mr Iger points out fervently. Disney’s battle against the state of Florida and Mr DeSantis may dissipate as he seeks to run for the Republican presidential nomination. Mr DeSantis has already announced publicly that he wishes to seek a settlement with the company.

The activist investors that have surrounded the company could also dissipate. In particular, ValueAct is known as a firm that is willing to work with management behind the scenes to avoid negative publicity and has even sometimes been used as a counterweight to its noisier counterparts (its Chief Executive was appointed to the board of Salesforce after it faced its own activist battle).

Lastly, less than one year ago Mr Peltz called off his proxy fight with Disney after the company announced restructuring plans.

Should headlines surrounding the company start to shift in sentiment once again and share prices recover, Mr Peltz could once again withdraw his proposals.

At the very least, the company’s absolute “core” business–its theme parks–remain in a solid financial and reputational position. Recent price hikes on tickets at the Florida and California theme parks seem to have had little impact, at least for now, on consumers’ demand.

After all, as one financial commentator points out, Netflix’s theme parks are comparatively lackluster.

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FINANCE The aftermath of the banking crisis 2023 saw the largest amount of banking turmoil since 2008. Will anything change?

Banking at its heart is a boom and bust cycle. Little over a year ago, economists believed that the global economy was in the former rather than the latter, as evidenced by record job market growth, stable worldwide GDP gain, and aggressive corporate expansion across the globe. However, with the extensive rise in European and American interest rates in an attempt to impair inflation and spending, mid-level banks with susceptible balance sheets in both America and abroad sent shock waves through markets by collapsing in a matter of days. With this new uptick of market volatility and a considerably more severe crunch in credit lending, it is clear that the system needs fixing–again.

The foundations of the recent banking turmoil can be understood through a seesaw. Imagine interest rates on one side of the seesaw, which indirectly control the availability and cost of credit and the other side consisting of the value of United States treasury bonds. As one side of the seesaw rises, the other must fall. The first substantial bank to fall this year, Silicon Valley Bank (SVB), experienced just that phenomenon, as their purchase of longterm government bonds–in a hedge that interest rates would remain continually low– went horribly wrong, as the bank was left with massive unrealized losses due to the aggressive rise of interest rates by the Federal Reserve. When these losses were publicly announced, a massive panic emerged amongst the bank’s depositors, many of whom were companies that had drastically exceeded the $250,000 that was insured by the Federal Deposit Insurance Corporation. Within two days, a sizable amount of the bank’s assets had been pulled in spectacular speed, and a flawed business went bust. Shock waves rippled through markets, as the Nasdaq’s banking index declined by a quarter in only a week, demoting the share prices to their value in 1998. Across the United States, mid-sized to community-level banks saw their shares collapse, in particular First Republic Bank, a bank with similar risks to SVB and whose stock fell by over 90% by the end of March. These events composed the immediate effects of the banking crisis.

The long-term effects of this financial turmoil though, are sure to be more than simply a dissolution of a select few of America’s medium-sized banks. For one, the panic among depositors and the surge in withdrawal requests across the United States forced the government to intervene, with the Federal Reserve introducing interest-free loans for banks susceptible to

to the same dilemma that SVB faced, ensuring that other banks with a similar portfolio to the Californian lender would survive. While this solution will stop the problem of banks collapsing in the immediate term, it could lead to the rise of what are known as “zombie-banks,” where financial institutions are only able to survive thanks to support from the government in order to prevent panic and weaken the overall financial system by costing hundreds of billions of dollars to support, and possibly allowing for evden greater financial chaos far down the line when even government support cannot save them from collapse.

The decline in valuations and new scrutiny for medium-sized banks due to the crisis will also likely lead the industry towards more consolidation in a fashion similar to the 2008 financial crisis. Since 1984, the number of financial institutions has declined by over 75%, with each financial crisis in particular leaving carcasses that stronger institutions could integrate–a situation that has parallels to now. Secondly, the above-average rates that small and medium banks must offer to remain competitive against their larger counterparts forces a significant decline in their profit-margins, diminishing their ability to survive should profits be squeezed and credit conditions tighten. Additionally, due to renewed pubGETTY IMAGES lic scrutiny, smaller banks are likely to lose their regulatory advantages that they have enjoyed since the Trump administration, including lighter liquidity requirements, easier stress-tests, and easier regulator inspections. While banking mergers will not be at the same scale as 2008, where banking powerhouses like Lehman Brothers and Merill Lynch were acquired, they will still be significant, as seen through the acquisition of aforementioned First Republic bank by J.P. Morgan Chase.

A series of mergers due to this banking crisis will lead to more banks being labeled “too big to fail,” and be guaranteed a bail out in the case of a crisis, allowing for the possibility of renewed risk-taking similar to the years leading up to 2008. Coupled with the establishment of zombie-like financial institutions, the industry risks having another crisis that could far surpass the impact of this one. The conclusion to draw from the most recent events is that the regulatory scrutiny and capital buffers for small and medium-sized banks is inadequate and that it is better to wipe out today’s shareholders of perilous institutions. Now it is time for policymakers to remedy these mistakes.

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FINANCE Finance

Crypto’s golden year After a strong year, crypto’s believers have proved the industry is here for good

O

ne could find no shortage of articles one year ago that proclaimed the end of crypto currency was in sight. In Nov. 2022, the collapse of FTX, the second largest cryptocurrency exchange, prompted “The Economist” to speculate whether it would draw in “the end.” Some were more decisive–an article for “The Atlantic” asserted that FTX’s collapse made it a bygone conclusion that crypto was “nothing more than a fad.”

The price of Bitcoin since then tells a far different story than a demise. In the past year, the signature currency has risen more than 150 percent to a staggering price of $42,000 as of publication. Even more impressively, its price throughout the year showed its resilience to bad publicity–which it faced no shortage.

For instance, take the fall of Changpeng Zhao, who led Binance, the world’s largest cryptocurrency exchange. After numerous lawsuits that alleged the firm mishandled customer funds and misled investors, Zhao ultimately pleaded guilty to money-laundering violations and forced both him and the Binance to pay a $50 million and $4.3 billion fine, respectively, to the United States government.

Zhao’s counterpart, Sam Bankman-Fried, who led the aforementioned FTX exchange, faced a similar fate, as he was found guilty of fraud in a criminal trial. In a sense, the indictments may have been a net positive for the cryptocurrency. After all, there are few crypto titans who have yet faced criminal charges.

COINBASE And then there was one

Except for one–Brian Armstrong, who leads Coinbase (and is pictured). The firm is notable for being the only mainstream cryptocurrency company that is publicly traded. While an investment this year in Bitcoin would certainly have made any investor perfectly happy, any shares purchased in Coinbase would’ve fared even better, having surged over 400 percent to a $40 billion valuation.

Much of Coinbase’s share price is in part due to news of a Bitcoin exchange-traded fund (ETF) that will likely be approved in early 2024. The introduction of a Bitcoin ETF would allow for investors to enjoy exposure to the currency through a regulated financial product and without the risk of direct investment. Even more importantly, it marks a symbol of maturity for an industry that has been labeled “the Wild West” by regulators.

Notably, the challenges that the path to a Bitcoin ETF faced before have subsided. For one, an American court ruled that the Securities and Exchange Commission was “arbitrary and capricious” in its refusal to allow Grayscale, an investment company, to convert its Bitcoin fund into an ETF.

Coinbase is poised to benefit massively from the likely flush of cash that will come with the approval of a Bitcoin ETF. Institutional investors will likely enter the sector in droves, and the firm–which generates 90 percent of its revenue from facilitating crypto transactions–is sure to benefit with the influx of purchases.

Perhaps contrary to expectations, crypto’s regulatory and publicity troubles have also helped the company’s share price. Nowadays, it seems that when a cryptocurrency company gets into regulatory trouble, investors are less skekptical of the industry and more of the firm itself.

In fairness to critics of the crypto industry, the resurgence still brings drawbacks. More “miners,” people who race to process crypto transactions in exchange for a payment in Bitcoin, are sure to emerge as its price rises. The miners with the largest amount of resources set up shop in communities with little-to-low energy prices and install extraordinary fast processors which can calculate and spin money out of little more than carbon and faith.

That’s not to say the climate damage caused by cryptocurrency is concrete. While the process of mining for new blocks is unavoidable in Bitcoin due to its decentralized structure, renewable energy companies could be offered government subsidies to sell their energy to bitcoin miners–allowing both parties to grow.

Regardless of one’s personal opinion on Bitcoin, it has shown itself to be largely immune to the boom-and-bust cycles that actual bubbles, like the tulip mania, experienced in the 1630s. Indeed, one year after “The Economist” article which speculated whether crypto’s end was near, it prescribed its survival to the idea of the currency being a cockroach, and admitted that, at the very least, “the [currency] has uses.”