July 22, 2021

Market recap

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Top Story

Bitcoin Miner Inks SPAC Deal

Crypto Miner Garners $4.3 Billion Valuation

Core Scientific, one of North America’s largest cryptocurrency miners, is going public via a SPAC deal with Power & Digital Infrastructure Acquisition Corp (XPDI). The deal values Core Scientific at about $4.3 billion. That is much higher than rivals Riot Blockchain (RIOT), which sports a market cap of $2.18 billion, and Marathon Digital (MARA), which has a value of around $2.25 billion.

In addition to mining for cryptocurrency, Core Scientific is one of the biggest providers of infrastructure and hosting for the blockchain market. The company is a heavy hitter in the industry with a variety of blockchain and crypto infrastructure patents and applications.

Core Out-Mines Rivals

Core earned $60 million in sales in 2020, and the company predicts that will increase to $493 million this year. Though the company’s main business is mining for crypto. It has minted over 3,000 bitcoin so far in 2021. Of that, 1,683 are for its own account.

Core’s rival, Marathon, minted 846 bitcoin in the same period while Riot minted 1,167. Core is also seeing increased demand for its infrastructure—so much so that it sold out of capacity through 2022. To meet the mining demand, it is adding to its existing capacity and is looking at opening new sites in more states. Core will use $300 million of the deal proceeds for growth.

Miners Offer Investors Diversification

SPAC deals with bitcoin miners provide another way for investors to have exposure to cryptocurrency. As bitcoin prices fluctuate, mining companies are a way for crypto enthusiasts to diversify while still being involved in the industry.

Businesses like Core are not without criticism. Mining for digital tokens requires a lot of energy which negatively impacts the environment. Core tries to minimize that with 56% of its electricity coming from solar, wind, hydro, and nuclear. To achieve 100% net carbon neutrality, it buys carbon credits to offset the rest.

From its advanced mining abilities to its environmentally focused approach, there are a lot of reasons Core is commanding a heftier valuation than its rivals. It will be interesting if that remains true once it begins trading as a public company.

Qualifying for a Private Parent Student Loan

Qualifying for a private parent student loan is usually similar to qualifying for most other types of private loan. Private lenders will review an applicant’s credit history and score, among other personal financial criteria, to determine the rate and terms they’ll qualify for.

This typically means applicants with good or excellent credit could stand to qualify for a better interest rate when taking out a private parent student loan when compared to the interest rate on a PLUS loan.

There are a variety of private companies that offer parent student loans, so parents have the option to shop around to find an interest rate and terms that suit their needs.

Some private lenders, including SoFi, have a pre-qualification process that allows potential borrowers to see personalized interest rate estimates based on a soft credit pull (which means their credit score won’t be impacted).

After selecting the preferred lender, borrowers typically file an application for the private parent loan. The exact process will vary slightly by lender.

SoFi's helping students and parents pay for school with our no-fee private student loans. See rates and terms in just minutes—and get access to tips, tools, and resources along the way.



A Weekly Column With Liz Young

Every week, SoFi’s Head of Investment Strategy shares her economic and market insights in order to help empower readers to take a more active role in their financial futures. This week, see what Liz has to say about the housing market shift.

If You Build It, Will They Come?

New and existing home sales recently hit their highest levels in more than a decade. The National Association of Home Builders Market Index, which measures homebuilder sentiment, hit a new high of 90 (out of 100 max) in November 2020, surpassing levels seen during the housing boom of 2005-2007.

But in the last few months these measures have softened and come off their peaks. Given that the housing market is typically an indicator of economic strength, a rollover in this data could be a sign that growth fears are founded. Or it could be that this recovery truly is different.

Not Enough to Go Around

The great migration from cities to suburbs helped fuel this cycle’s housing boom, bringing the monthly housing inventory to lows last seen in 2003. Naturally, this imbalance between buyers and sellers drives bidding wars and pushes prices higher. In fact, the S&P Case-Shiller US National Home Price Index rose 14.6% in April 2021 compared to one year ago. To put that in perspective, the last time home prices rose by more than 14% year-over-year was in the fall of 2005.

Another force putting upward pressure on prices was the rising costs of home building materials such as lumber and copper. Although well off their peaks in spring of this year, the move down in input costs has yet to filter through to home prices. Consumers have taken note and slowed their purchases—according to a report from Fannie Mae in June, only 35% of consumers think it’s a good time to buy a home.

The Canary in the Coal Mine?

Given all of this, one could speculate on the link between a cooling housing market and growth concerns in the US. One could also painfully recall what happened after the last housing boom and get nervous about what may lie ahead.

But I don’t think that’s necessary. First, this housing boom was a result of the crisis, not the cause. Second, it’s true that total mortgage balances rose in the first quarter of 2021 to $10.2 trillion, which is above the $9.3 trillion level seen in fall 2008. More importantly though, the average credit score of borrowers rose through this crisis, instead of falling like they did ahead of 2008—meaning the risk embedded in these loans should be lower. And third, today’s average 30-year fixed rate mortgage is carrying an interest rate of 2.98% vs. the average rate in fall of 2008 of over 6%.

Smart Money

Perhaps consumers and lenders learned their lesson in 2008. And perhaps that lesson was: don’t overspend and don’t overextend or it all falls down. Yes, the housing market is a cyclical indicator, and yes, the housing market has cooled of late. From an investment perspective, the biggest gains may have already been had. But I don’t see this cooling as an indication of danger. I see it as an indication of a smarter consumer.


Covering the Rising Cost of College

Affording College Becomes More Difficult in the Wake of the Pandemic

Earning a four-year degree from a private or public college has become more expensive since the COVID-19 pandemic. For the 2020-2021 school year, a four-year degree at a private university costs an average of $50,770. For in-state public colleges the cost is about $22,180. Adding in other expenses associated with college, some families are spending over $70,000 per year on a college education.

Even before COVID-19, paying for college was tough. Then the pandemic wreaked havoc on millions of people’s finances, making paying for college even more difficult for many. The good news is that most families don’t have to foot all of the bill for college on their own. From scholarships to financial aid, here is a look at how to make paying for college more manageable.

FAFSA Applications Fall

The pandemic caused financial hardship for many. Though the labor market and the economy as a whole is recovering, many people are still recovering from the past year and a half financially. Close to two-thirds of parents who responded to a recent survey expressed concerns about covering the cost of higher education.

Despite this trend, the number of families completing the Free Application for Federal Student Aid, or FAFSA®, is down. According to one study, 68% of families completed FAFSA this year, which is lower than the 71% in the 2019-2020 school year. In order to access federal grants, work-study, and federal student loans, families must complete FAFSA. However, some families skip the application because they do not think they will qualify or they find it too complex. The reality is that most people who apply receive some form of aid, so it is worth checking.

Scholarships Often Overlooked

Scholarships are another major source of funding for college-bound students, but many families do not take advantage of them. A recent survey found that only slightly more than half of families turned to scholarships to get money for college. That is despite the fact that the average scholarship size is $9,797. The main reason families are not getting scholarship funds is that students don’t fill out the applications.

Without a doubt, the cost of earning a college degree is expensive and will only get pricier. However, thanks to scholarships, grants, financial aid, and student loans, there are ways to make it more manageable.

Not-So-Breaking News

  • Ford (F), Lyft (LYFT), and Argo AI are teaming up to launch a fleet of self-driving cars. The companies plan to start self-driving rides with safety drivers in Miami this year. The aim is to have 1,000 of the autonomous vehicles on the market by 2026.

  • MGM Resorts (MGM) wants to build a $9 billion casino in Osaka, Japan, aiming to be the first to open up in the resort town. Japan legalized gambling in 2018 but opening casinos has been a slow process with the pandemic adding to the delays.

  • Johnson & Johnson (JNJ) expects COVID-19 vaccine sales to hit $2.5 billion this year. The drug company’s second quarter earnings topped Wall Street’s expectations.

  • Coca-Cola’s (KO) second-quarter earnings topped 2019 results as the global economy regained strength. All of the company’s drink segments saw double-digit growth. The strong showing in its second quarter prompted Coke to raise its full-year forecast.

  • Verizon Communications’ (VZ) second-quarter financial results surpassed Wall Street views, lifted by consumers' shift to 5G phones. Verizon’s unlimited plans also drove sales in the quarter.

  • Bitcoin mining requires a lot of electricity. Learn why, how much, and whether it’s worth it.

Financial Planner Tip of the Day

"Creating a budget in college means anticipating both estimated expenses, like club dues, tickets to athletic events, and books, as well as ‘for sure’ expenses, things like rent or room and board, utilities, and tuition that are essential in the college experience. From there, it’s about determining what money can be allocated to fun things, like nights out and spring break."

Brian Walsh, CFP® at SoFi

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