As readers of this blog may remember, back in December I looked at the story of the Long Island Iced Tea Corp. changing their name to the Long Blockchain Corp. and declaring that they had pivoted from being a money hemorrhaging bottled-drink company to now being a bleeding edge blockchain-centric technology company. Based solely on a press release of the name change and the dubious pivot, their stock price exploded…closing up almost 300% on the day of the announcement. At that time, I noted in the blog that it seemed like a perfect example of stupid money pursuing stupid market hype, much like we saw during the halcyon days prior to the collapse of the dotcom bubble in 2000.
In the days following their big announcement (and my blog post of the time), the company began pursuing a strategy that appeared to have been borne out an extended weekend of crack smoking and binge consumption of Everclear.
On January 5, they announced they were buying 1000 bitcoin mining machines…for some reason. Further, in a separate press release that same day, they announced they were doing a public stock offering – apparently to pay for the mining machines. Four days later on Jan. 9th, they announced they changed their collective mind and weren’t going to do the public offering after all, but they were still going to buy the mining machines. A week after that, on the 16th, they announced they planned to merge with Stater Blockchain, “a UK-based business that is building blockchain solutions for the global financial markets”. They felt this was a great deal because it “complemented” their acquisition of the mining machines…somehow. Two weeks later, the company announced they weren’t going to buy the machines after all, but they were still going to try to merge with the UK-based company in order to do blockchainy stuff (I guess the bitcoin machines turned out to not be all that complementary).
On February 20th, they announced a new CEO and said they were spinning off their money losing bottled drink company. Since he arrived on the scene, the new CEO appears to have shut down their marketing machine (or maybe he threw out the crack pipes and locked-up the liquor cabinet) as the company has not made any new public announcements since, outside of one in February that announced a new board member.
After trading over $9/share on the day of their big name change announcement, the stupid money has moved on and the company appears to be standing just outside the graveyard that holds the remains of thousands of hype-driven tech companies. Nasdaq announced yesterday, despite appeals from the company, that they are delisting Long Blockchain Corp. effective later this month. As of this afternoon, the stock was trading for 31 cents, down some 97% from their high in December.
Who knows, maybe they have a secret strategy that doesn’t involve a 1000 bitcoin mining machines ensconced in a secret underground datacenter in some Nordic country, and perhaps they can eventually make something of themselves. Unfortunately, and speaking as someone whose had experience as an OTC pink-sheet stock-holder, the chances of finding investors to back your grand vision after this kind of train wreck would seem pretty slim.
So what does this mess say about blockchain technology?
This is simply an example of stupid investors locking onto to a buzz word, and an uninformed or, as some have claimed, fraudulent company trying to take advantage of that.
Blockchain and distributed ledgers are promising technologies and have the potential to have a huge and lasting impact on the energy and commodities markets in the coming years. Unfortunately, realizing the promise of these technologies will take time and the backing of smart investors who understand not only the potential rewards, but more importantly, the challenges that are yet to be overcome.
For now, this all just a bit of schadenfreude.